Mopani Copper Mines (MCM) has given notice to retrench nearly 5,000 workers in view of a power supply standoff with the suppliers Copperbelt Energy Corporation (CEC).
CEC has slapped a power supply restriction on MCM, resulting in the mine scaling down operations and turning away thousands of workers in the interim, but it looks set that more permanent job losses will follow soon, if the impasse continues.
Energy Minister David Mabumba indicated that as a result of the power deficit, MCM was losing around US$3million per day.
Labour Commissioner Chanda Kaziya confirmed receiving a notice of retrenchment from MCM, during an interview yesterday.
"Yes, we have received the notice of retrenchments from MCM and we will look into the matter," Mr Kaziya indicated.
MCM's public relations manager Nebert Mulenga issued a statement yesterday stating, " We regret to advise that it has become necessary for Mopani Copper Mines to curtail some areas of its operations due to the restriction of power by CEC."
He said while the company worked on optimising the use of the limited power that it was receiving, it would have to close down several areas of operations, with a direct impact on 4,700 employees.
He said MCM was still engaging with the trade unions and other stakeholders to find solutions, before the huge job-cut was effected.
"We have continued to negotiate with CEC and ZESCO in good faith, however, without power supply to our operations, we are unable to maintain our workforce," he added.
Mr Mulenga said the decision had been necessitated by the unilateral action of CEC to restrict power supply without notice and against the provisions of the Power Supply Agreement.
He said MCM was operating under a Power Supply Agreement (PSA) of March 31st 2000, that was recently amended on March 6th ,2015, and was valid until 2040.
"The PSA strictly sets out the agreed tariff and increases during the contract period. The contract provides that a tariff may be increased on agreement by both parties. This was the case in 2008 when Mopani agreed to a tariff increase of 33% over and above the contractual tariff. The current proposed revision would result in a further increase of 54%," Mr Mulenga said.
He said within the provisions of the agreement, there were clear steps to be taken in the event of an impasse on tariffs adding that the dispute resolution steps had not been followed by CEC.
"We are prepared to continue to follow the process as underlined in the agreement. However, for as long as the restriction is in force, we are unable to conduct our operations safely," he said
He said the mine had some of the wettest underground copper operations in the world and each day 190 million litres of water had to be drained to ensure the safety of the workforce.
He said since 2014, MCM had invested more than US$1 billion in site expansions and upgrades to extend the life of mine by a further 25-30 years and that the alleged failure by CEC to honour the PSA placed current and planned investments at a risk.
The two parties were expected to continue talks in court.