The threatened layoff of 4,700 workers by Mopani Copper Mines following a contractual dispute between the company and the Copperbelt Energy Corporation (CEC) is reminiscent of the economic challenges which hit the Zambian economy in 2015 and led to massive job losses on the Copperbelt, including about 4,300 at Mopani.
New research by the Zambia Institute for Policy Analysis and Research (ZIPAR) shows that the Copperbelt was the hardest hit.
ZIPAR conducted a survey of businesses and a nationally representative survey of the public in 2016 and found that the Copperbelt had the highest net job losses – 11.8% of respondents reported losing their jobs in the last year in contrast to Lusaka which recorded job loss of 8.4% and other provinces where the figure was just 4.1%.
The research also highlights that respondents in the Copperbelt were more likely to report reductions in wages. Nearly three in five (59.3%) of the respondents on the Copperbelt and 59.6% of respondents from other provinces reported a reduction in wages and salaries compared to only 31.3% of the respondents in Lusaka.
More positively, fewer residents of the Copperbelt reported that their economic situation had worsened. At 52.9%, the people on the Copperbelt had the lowest proportion of those who felt their own personal economic situation had got worse. At 58.9% and 60.8%, Lusaka and other provinces, respectively, had proportions higher than the national average.
Other findings included:
ZIPAR are also warning that jobs are unlikely to come back, at least in the short term. Since the lows of 2015, Copper prices have been on the increase, bringing hope to the ravaged mining sector that the lost jobs will come back. Despite the recent price optimism in 2016 and the first half of 2017, world demand for copper, as well as copper prices, remain unpredictable. It is therefore unlikely that the mines will, in the short term, shift back to aggressive growth strategies and hiring of workers at the same scale as before.
Besides the short term solution of resolving the impasse on power tariffs and therefore power supply to Mopani, it is necessary to diversify the Copperbelt economy to help bring back jobs in the medium to long term. ZIPAR’s proposals for bringing back jobs to the province include:
In line with Government’s policy of moving to cost reflective electricity tariffs, ZESCO increased its tariffs following approval by the Energy Regulation Board. This prompted the Copper Energy Corporation (CEC), which buys electricity from ZESCO and resells to the mines, to increase tariffs for their mining customers to 9.30 US cents/KWh instead of the individually negotiated rates that have averaged 6 US cents/KWh.
However, Mopani Copper Mines contends that this hike was against the provisions of the Power Supply Agreement between the two parties and has not been paying the new tariffs. As a result, CEC has restricted electricity power supply to Mopani leading to Mopani curtailing some areas of its operations. The mining giant, which has invested US$1 billion in site expansions and upgrades since 2014, is likely to lay off 4,700 direct workers if normal power supply is not restored.
Notes to Editors