Konkola Copper Mines has suspended operations at its Nchanga underground mine in Chingola with effect from Friday, 27th November 2015. The mine will be back in operation "when market conditions improve".
The decision means that all "contracting firms operating at Nchanga will be released". This will result in immediate loss of around 1,675 contracted employees. A further 825 will be laid off over the next three months.
KCM has already laid off 150 employees. This brings the total job losses to around be around 2,650. It has advised that "pensionable KCM employees and permanent staff" from the Nchanga underground will be redeployed within the business.
KCM's decision comes off the back of Glencore, an Anglo-Swiss commodities company, cutting 4,300 jobs at the Mopani Copper Mine. The Chinese-owned company CNMC Limited has also suspended operations at the Baluba mine in Luanshya, laying off 1,600.
The jobs losses are now galloping towards 10,000. But as we indicated this week that focusing on that figure underestimates the scale of unemployment. It is not just mining workers being laid off, mining contractors have also already lost a lot of businesses which has resulted in more unemployment in other areas.
We should also keep in mind that those who are being laid off will in turn lay-off others. Some workers employ house servants. Now that they no longer have a job or contract in mining companies they will in turn not be able to employ other people.
Most industry forecasts suggest that copper prices will not rebound until late 2016 / early 2017. It is very sad situation Zambia finds itself in. What is even worse is that it could all have been avoided.
We have been predicting this scenario for three years now. We strongly advised that there was need to slow down borrowing and ensure sufficient fiscal space to enable more expansionary policies in the highly likely event that copper prices collapsed. We were told that we were foolish!