Another copper mine shuts down
Pini Bothoko | Friday May 8, 2015 18:00
The company has also taken a decision to significantly cut production at its flagship mine, Mowana open pit.
Thakadu becomes the second copper mine this year to be closed after Discovery Metals shut down Boseto mine in January.
In a statement released yesterday, African Copper said low ore grades, coupled with high operational costs, have necessitated the early termination of the mine. “The Thakadu mine is nearing the end of its scheduled mine life and in order to confirm future grades, it would be necessary to conduct medium depth high resolution drilling.
“However, due to the short remaining mine life, a smaller mining footprint and the cost associated with such a drilling programme, the company has taken the decision to stop mining at the Thakadu pit by the end of May 2015. “This plan also envisages mining Mowana ore at a significantly reduced rate, producing copper to cover operating costs while conserving cash through tight cost control,” reads the statement.
While BusinessWeek could not get an official comment from the company, mine sources said that the workers who are facing possible job losses are employees of Diesel Power Mining Company, a mining company that has been contracted to do mining on behalf of African Copper.
Asked about the impending job losses, Diesel Power’s Business Improvement Manager Humphrey Chitima, who was initially elusive, confirmed the looming retrenchments. He said all employees have been served with retrenchment letters including him.
“At the moment, there is nothing much to disclose except that the job losses are real,” he said, but did not have readily available figures of the company employees soon to be rendered jobless. In 2014, Diesel Power Mining Company won a 52 months contract to do mining activities at Thakadu and at another African Copper operation, Mowana Mine.
According to an insider, the job loss will not affect the full permanent African Copper staff compliment, as full-time employees will reportedly be relocated to Mowana Mine in Dukwi.
African Copper spokesperson Moruntshi Kemorwale, however, said that the contract that Diesel Power had signed with the mine remains effective.
Asked if they are aware of Thakadu Mine closure Botswana Mine Workers Union (BMWU), Secretary General Bob Malele pleaded ignorance.
Malele said the mine might not have seen it as appropriate to notify them about the mine closure because no union members will be affected. As part of the cost cutting measures, African Copper has also announced that it would seek shareholder approval at a general meeting on May 27, 2015 to delist from both the Botswana Stock Exchange (BSE) and London’s AIM.
Early this year, African Copper announced that it might not be able to continue operating Mowana and Thakadu mine if copper prices do not improve. Copper prices have not been stable since 2008.
In a statement released in February, the company warned that should it not secure additional funds, and if current market conditions prevail, it may not then be able to continue as a going concern.
The company added that in light of the existing market conditions and, more specifically, the recent fall in the copper price, it was conducting a review of its operations to consider various short-term and long-term strategies to meet the group’s current and future funding requirements.Due to weak demand, copper prices are at their lowest since 2008 after dropping by $1,000 per tonne, or 15 percent in 2014 alone.
African Copper’s latest financial results show that the BSE listed company recorded a loss of $8.8 million (P83 million) for the six-month period ended 30 September 2014, compared with a loss of $29.1 million for the corresponding period in 2013. As at March 30, 2015, it owed its parent company ZCI over $107 million (P1.07 billion).