They say the decision was reached after considering the escalating production costs owing to the economic downturn coupled with the remaining lifespan of the mine.
This was the message conveyed to Government this week when the Skorpion Zinc management met President Hage Geingob, vice president Dr Nickey Iyambo, Prime Minister Saara Kuugongelwa-Amadhila, mines and energy minister Obeth Kandjoze.
The Skorpion Zinc delegation consisted of CEO Deshnee Naidoo, General Manager Irvinne Simataa and Corporate Communications Manager Nora Ndopu.
During the meeting that lasted just over 30 minutes, Government made it clear that it did not call the meeting to question the retrenchment decision, but rather to discuss ways on “how to mitigate the pain” the layoff would cause those affected.
The Indian-owned mining giant said plans are underway to extend the lifespan of the mine, but for now it has to double its production, which subsequently means there is need to purchase new equipment and employ more workers.
“With a three-and-a-half-year lifespan remaining, it will not be economical to invest in equipment right now. Some of the affected employees will be absorbed by the incoming contractor that we have identified,” Naidoo said.
She said due to the remaining lifespan, staff turnover at the mine has topped 25% and mining activities now have to be conducted below the set water table, which will require an investment of over N$100 million to move waste while mining for the ore.
“We came up with a solution which we think is sustainable.
That is through bringing in a skilled contractor [a Tier 1 contractor for that matter] who can bring workers, equipment and services to mine in the most risk-free manner,” she explained.
Naidoo added: “That is the dilemma we face hence the decision we took.”
She said the contractor will absorb some of the retrenched workers as best it can and employ another 300 to service the contract.
“We created life where there should not have been, although not directly by increasing the number of employees but we will have more people getting jobs. For us this is the most economic and sustainable model,” she said.
She also explained that when Anglo America bought the mine in the early 2000s, the projected plan was only 15 years.
“Their plan projection was only to process minerals for 15 years. So when Verdana bought it in 2011, money was pumped into the project on exploration to extend it because we believe that there must be more metals.
The reason why they [Anglo] projected a 15-year mining period is because they knew it will not be economical to mine thereafter 15 years,” said the CEO.
“To mine economically, you need to get revenue while stripping waste, and as we know these are tough times for the mine because it is in its last years. Last year, we stopped mining for two months and spent over US$15 million to get things back on track. This coincided with the global economic downturn,” she said.
“We are now forced to mine below the water table, meaning we now mine [less] ore and more water.”
The CEO said all stakeholders were informed in time about the retrenchment plans and the required sensitisation procedures were made.
“Some workers have already indicated that they want an early separation. We gave a six-week notification period despite the Labour Act providing for only four weeks,” Simataa said.
He also indicated that it is “rather unfortunate that the negotiations with MUN (Mineworkers’ Union of Namibia) collapsed”.
“We had three meetings with the union [MUN], unfortunately they were prematurely terminated when the union declared a dispute,” he said.
Simataa said Skorpion Zinc remains concerned about the well-being of the retrenched employees and will continue working on ways to mitigate the losses.
At this point, it is not known if the incoming contractor will give the same benefits to the employees that Skorpion Zinc gave.
This includes benefits such as transport, accommodation and medical aid.
“Everything is clear now and we are happy,” said Geingob after the briefing by the Skorpion Zinc management.
MUN last month called on President Geingob to mediate in the retrenchment saga of the 78 workers at the Rosh Pinah-based Skorpion Zinc Mine. The union even went as far as expressing its displeasure with the lack of support from the mines and labour ministries, as well as the //Karas regional political leadership.
“The relevant authorities have ignored our pleas for intervention, so now we direct our call to the highest authority, our President, to stop the retrenchments Skorpion is instituting for its own capitalist self-interest,” MUN vice-regional chairperson for the southern region, Allen Kalumbu, said last month.
He said the union maintains its stance of vehemently opposing the retrenchments and outsourcing of the company’s mining department where the affected workers are employed.
Most of the workers received their retrenchment letters last month.
MUN is however refusing to accept the outsourcing of the permanent Skorpion staff.
“Why should the workers be subjected to a contract labour system where the contractor can do with them what they want? This is catastrophic and if allowed, can happen at other mines in the country as well,” said Kalumbu. Kalumbu said Skorpion should not be allowed to run away from their responsibility towards the workers and called on Geingob to engage with the company and the union on how to retain the workers.
The company has remained with their resolution to retrench without considering other alternatives and this cannot be tolerated.
Basil Read Holdings announced that its shares slumped by nearly a quarter on Tuesday after the construction firm said it would swing to a full-year loss.
The construction firm’s shares plunged 23% to R1.9, the lowest since they hit R1.77 on December 1, which in turn was the lowest since September 2005 and a fraction of its record high of R32.7 in October 2007. Shares closed down 18.95% to R2.01 in Johannesburg.
The company, which had headline earnings per share of 143.87 cents in 2015, said it would report a loss of between 80 cents to 98 cents per share for 2016.
The loss for continuing operations would be 35 cents to 42 cents a share, it said. Basil Read said its operating profit had been hit both by losses at its Olifant River water resource development project and a R41 million (US$3 million) charge, which was part of a settlement with the South African government.