Government officials say Glencore will not shutter operations in Zambia
Glencore Plc. told the Zambian government that it wants to keep operating its Zambian copper mining subsidiary Mopani Copper Mines (MCM), not shutter the operations, mines ministry permanent secretary Barnaby Mulenga said on April 19.
A week earlier, tensions between the company and Zambia were high as Zambian officials prevented a Glencore executive from leaving the country after Glencore said it was going to put MCM under “care and maintenance.” That decision sparked a backlash from Zambia’s government, which threatened to revoke the firm’s mining licenses because it said Glencore did not give enough notice before suspending the mines.
“The government wants to see a win-win situation and respects investors but we need to protect the interests of Zambians,” Mulenga told Reuters.
A Glencore spokesman declined to comment on whether the company wanted to keep MCM open and referred Reuters to an earlier statement.
“Following Mopani’s recent announcement regarding the transition of its mining operations to care and maintenance, Glencore is currently in discussions on the way forward with the Government of Zambia,” Glencore said in that statement.
MCM, which produced 119 kt (131,000 st) of copper in 2018, is 73.1 percent owned by Glencore, 16.9 percent by First Quantum Minerals and 10 percent by Zambia’s mining investment arm ZCCM-IH.
Finance Minister Bwalya Ng’andu also denied a report MCM and other Zambian mines might be bargaining chips in ongoing debt negotiations with China.
A Wall Street Journal report said, citing Zambian officials, that the government was considering giving China mining assets including Mopani as collateral in exchange for deferral or forgiveness of its sizeable debt.
Zambia’s external debt stood at $11.2 billion by end of June 2019, the finance minister said in March, with about a third of that foreign debt owed to China.
The Mopani mines are on the outskirts of Kitwe, a city about 180 miles north of Zambia’s capital, Lusaka. The mines have been troublesome for Glencore, but that hasn’t stopped the company from spending billions of dollars on sinking new shafts to try and almost triple copper production, to about 127 kt/a (140,000 stpy).
Still, Mopani was unprofitable even before the coronavirus pandemic led to a collapse in the copper price, convincing Glencore that its best option was to mothball the mines for at least three months.