Glencore's Plans to Close Zambian Copper Mines Rejected by Zambian Government -- Update

By Nicholas Bariyo

Glencore PLC plans to suspend copper output in Zambia for three months after it declared a force majeure related to at least two mines amid the worsening economic carnage caused by the coronavirus pandemic, said Richard Musukwa, minister of mines and mineral development, on Tuesday. The Zambian government has rejected the plans, he said.

Glencore's unit in Zambia, Mopani Copper Mines, said in a statement that halting operations will help protect the company's value and preserve future growth projects when market conditions improve.

"The operating, regulatory and macroeconomic environments remain very challenging and have continued to place significant pressure on the business," the company said. "Mopani's situation has been further impacted by the critical disruptions to international mobility, transportation and supply chains arising from Covid-19."

According to Mr. Musukwa, the government has rejected the company's plans to close the mines because the reasons being cited are not adequate and "do not conform with the law."

Glencore's decision comes days after it announced that it was reviewing its Zambian operations to minimize costs amid the uncertainty caused by the coronavirus pandemic.

Mr. Musukwa said the government won't let the commodities giant hastily close operations and cut over 1,100 jobs. Glencore produced around 120,000 tons of copper at its Zambian units in 2018. Until the current disruption, the miner hoped to produce between 50,000 to 70,000 tons of copper at its operations this year, according to company officials.

"The Ministry is not aware of any event that has happened... which makes mining impossible," Mr. Musukwa said. "The measures taken by government to mitigate the effects of Covid-19 have hitherto not been a lockdown but steps to allow commerce to continue in the country, especially the mining sector," he said.

Last year, Glencore closed its giant Mutanda mine in the neighboring Democratic Republic of Congo amid sliding metal prices. Copper and cobalt prices have taken a hit since late last year, amid concerns over the global economy and the trade war between the U.S. and China. The pandemic has compounded mining companies' woes.

Write to Nicholas Bariyo at [e-mail]

(END) Dow Jones Newswires

April 07, 2020 11:39 ET (15:39 GMT)

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