Glencore Suspends Copper Mining at Katanga and Mopani Mines for 18 months
Glencore also said it had suspended copper production for 18 months from its Katanga operation in the Democratic Republic of Congo and its Mopani project in Zambia. The decision will remove about 400,000 metric tons of copper cathode from the market, Glencore said. Copper prices rose as much as 1.7 percent in London. (Read more)
Unfortunately for the two African mines, they are mere pawns on the global chess-board that Glencore is playing on. Suspending copper production for 18 months will reduce global copper output by 400,000 MT over the period. And when other miners cut production (which has begun), global supply will be even further eroded. The combined effects of this should be a rise in copper prices which went up by 3.5% this week after Glencore’s announcement. Supply and Demand 101.
Ivan Glasenberg is only doing his job as CEO of Glencore - his number one priority is to maximize shareholder wealth. Mopani and Katanga accounted for less that 2.1% of parent company Glencore’s $87 billion first half 2015 revenues. It shouldn’t really be a big surprise that they can be taken offline so easily. This one move epitomizes the reason why Zambia should do whatever it takes to diversify its export base.
The only decent news is that that Mopani will retain the majority of its about 20,000 strong workforce (55% contractors) while it suspends copper output and embarks on this expansion/upgrade program.
The Government should refrain from breaking its back to offer special concessions to the mining sector which:
Trying to decipher this puzzle that is Zambia by using a variety of publicly available data (structured and unstructured) in conjunction with my own skill/experience. * * *