Sinomine plans job cuts at Tsumeb smelter despite merger deal banning retrenchments

Chinese mining company Sinomine plans to retrench workers at its Tsumeb smelter, despite a three-year no-retrenchment merger condition.

Sinomine Resource Group took over Dundee Precious Metals (DPM) at the town in a merger last August.

Authorising the merger last year, the Namibia Competition Commission (NaCC) set a number of conditions including that “there shall be no retrenchments of Namibian employees of the target undertaking as a result of the merger for three years post closing of the transaction”.

Spokesperson Alina Garises on Thursday said the company is experiencing challenges and will be reducing costs, including retrenching workers.

She said Sinomine chief executive Loggan Lou held a series of engagements with employees, government officials, and service providers to explain the company’s upcoming developments.

Lou highlighted that increased smelting capacity in major copper-producing regions had resulted in substantial overcapacity.

“This has led to a shortage of copper concentrate, placing pressure on smelters worldwide, including Tsumeb,” he said.

“In response to these market conditions, Sinomine Tsumeb Smelter will temporarily pause copper smelting operations and place the plant under care and maintenance until the market improves,” Lou announced.

He said to ensure sustainability and competitiveness, the company was targeting an overall cost reduction of 30% to 40%.

“As part of this transition, a voluntary separation process for employees will commence,” the statement reads, without stipulating when the retrenchment process would start.

However, according to the Mineworkers Union of Namibia (MUN), of which the members attended the meeting with Lou, the retrenchment process was set to start on Friday.

“Yesterday (Monday), management had a meeting with the union branch leadership where they were told the company would initiate a voluntary exit scheme on Friday,” MUN northern regional coordinator Reginald Kock said last Tuesday.

“And the target is 40% of about 650 workers at the smelter,” he added.

This was confirmed by MUN secretary general Fillepus Ampweya, who said the union would approach the Ministry of Justice and Labour Relations on the issue.

Kock said management had told the workers the human resources department would be available on Friday to guide them on the voluntary retrenchment process and how severance packages would be calculated.

He said if retrenchments are implemented, it would be in violation of the conditions of last year’s merger.

“The transaction is not even a year old. Its first anniversary is supposed to be in August,” Kock said.

NaCC spokesperson Dina Gowases says the commission was not aware of the planned retrenchments.

“But should they happen and are found to be in violation of the set conditions, remedial sanctions would follow. There is a commitment to no retrenchments of Namibian employees for three years following the merger,” she says.

The commission also stipulated that should the undertaking identify potential retrenchments, it should notify the commission one month before these retrenchments are due to be effected. – email: [email protected]