Job losses as Tschudi mine closes

The closure is a result of Weatherly's debt having escalated to N$2 billion.

10 January 2020 | Business

The Tschudi copper mine near Tsumeb is set to stop operations at the end of next month, leaving about 420 workers jobless amid ongoing retrenchment negotiations with labour union representatives.

The closure of the mine comes as its parent company, Weatherly, which plans on retrenching 20 workers, has found it increasingly hard to honour a US$90 million (N$1.28 billion) debt to financing company Orion for the construction of the Tschudi mine. Weatherly's debt has since escalated to US$140 million (N$2 billion).

About 400 other workers, some employed by contractors at the mine, expect to lose their jobs too.

A unionist at the mine and a miner who is employed by Weatherly at Tschudi both told Namibian Sun about pending retrenchment negotiations and the prospect of unemployment.

Paul Sitamba, a Mineworkers Union representative, said the bulk of the workforce was expected to be affected and that negotiations to discuss retrenchment packages were now underway.

“This week was the start of negotiations over retrenchment packages. They are going to put the mine in care and maintenance. Mining will stop at the end of February. By July, we understand that only stripping will be taking place,” he said.

“They will be laying off workers in three stages. Close to the total number of workers are expected to be affected.” A mining employee who did not want to be named said they were informed last month of the planned closure.

“In December, we were told they will close the mine in February while they are looking for investors. They will start retrenching in March. Mining will continue until they finish the stockpile. They are busy negotiating retrenchment packages with the workers,” the source said.

Mining commissioner Erastus Shivolo confirmed that Weatherly had written to the ministry of mines on their intentions to cease operations at the mine.

“We have received a letter that indicates that the company is going to suspend operations at the end of February. That is in terms of the provisions of the [mining] law,” Shivolo said when contacted.

Weatherly Mining Namibia MD John Sisay tried to dispel news that the mine would ultimately end up in care and maintenance, and said they were actively looking for new investors.

“We are not going into care and maintenance but into business development mode to find another investor that will allow for more exploration and push-back. Mining is going to stop end of February. We will see about 20 employees of Weatherly going, I cannot talk about the contractors. We will still continue stripping… we will still be producing copper for the foreseeable future up to 2021, still paying taxes and royalties,” Sisay said.

Weatherly's debt to Orion and the copper market were factors that made it seemed unlikely that mining would occur at Tschudi in the foreseeable future, Sisay said.

“Weatherly owes Orion US$140 million. There is no way that can be repaid [with] the state of copper mining,” said Sisay.

He was however optimistic that a new investor could potentially come on board.

“We are talking to several interested parties. They just need to understand the asset better, the ore body better. We hope for a stronger market in 2020. The asset in terms of mining equipment is still fairly new and working well,” he said.

Chamber of Mines of Namibia CEO Veston Malango said he had not yet been informed formally regarding developments at Tschudi and its planned closure.

Weatherly was placed under administration in 2018 while its shares were suspended from the London Stock Exchange's Alternative Investment Market. In late April, Weatherly put itself up for sale as it sought funding to buy the Kitumba project in Zambia. That deal lapsed after it was unable to agree to a backstop date extension.

Weatherly employed 122 workers on a full-time basis and 627 contractors at the end of 2017. The company recorded a N$67.4 million loss in 2017, according to the Chamber of Mines of Namibia.


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