Skorpion, MUN at loggerheads
Vendanta Zinc International said the production ramp-down at Skorpion will happen progressively during April.
31 March 2020 | Business
About 1 500 employees are affected by the decision by Vendanta Zinc International (VZI), the UK-based company that fully owns Skorpion.
Skorpion yesterday released a statement saying the mine and the MUN will continue to engage in line with the provisions of the Labour Act and on the basis of existing agreements.
VZI acquired Skorpion as part of the acquisition of Anglo American’s zinc business in 2011. It embarked on the SZ Pit 112 mine-life extension project in April 2017. The successful completion of the project and thus mine closure and refinery care and maintenance was envisaged for May 2020, according to the statement.
“However, significant events (pit stability) and inefficiencies (including labour disruptions) during this period have resulted in intermittent stoppages and/or delays which have in turn unfavourably extended the project timeline and significantly eroded project value,” VZI said.
According to VZI, Skorpion experienced a major open pit failure which resulted in an ore gap of four months – which thus required the stoppage of the refinery from November to January.
“The failure was safely and successfully mined out. However, more (smaller) failures have since occurred with the latest one in January 2020 sterilising a significant portion of the open pit. This has resulted in an ore gap in excess of 10 months. Further technical studies have indicated the existence of similar such failure structures at depth,” VZI said.
The company said production ramp-down will happen progressively during April, which overlaps with the country-wide lockdown of mines to contain the spread of Covid-19.
The chairperson on the Skorpion branch of the MUN, Petersen Kambinda, issued a statement saying mining contractor Basil Read’s contract with Skorpion was terminated on Friday night, affecting 400 employees.
Kambinda said the pit challenges are known and “have outlived the test of our times”.
“Business principles dictate that if mining activities and mining modus operandi are no longer financially viable, it becomes inevitable that you sell the mine to the next interesting mining investor,” he said.
The mine is unique in “several ways” and if placed on the market, “a lot of international mining investors will flock” to buy it, according to Kambinda.
According to the annual report of the Chamber of Mines in Namibia, Skorpion made a profit of N$238 million in 2018/19.
The mine paid a total of N$343 million in wages and salaries and spent N$1.27 billion on local procurement.