Announcements

Skorpion Zinc provides update on mine expansion project

Rosh Pinah, Wednesday, 22nd March 2017: Skorpion Zinc Mine would like to provide an update to the media on the current status of the mine’s expansion project, and the engagement with employees affected by the transition.

Background:

Skorpion Zinc Mine has been in operation since 2003 and was originally expected to close in 2015. It was acquired by Vedanta Plc and became part of the Vedanta Zinc International (VZI) group in 2010. Rather than simply following the plan to the planned closure, VZI was able to extend the life of mine initially to mid-2017, and subsequently beyond. This has been achieved through additional exploration and with the support of government and employees.

The next phase in the life extension of the mine is the expansion of Pit 112, which has become possible through the engagement of a professional mining operator Basil Read Namibia. Basil Read Namibia will provide the specialist expertise and the urgently required bigger fleet of millions of dollars-worth of heavy mining equipment. The technical viability of this expansion is time-bound, however. This means that operations must begin immediately, so that the refinery operations can be sustained. If they do not, the project may not be viable.

Affected employees, and new jobs created

As a result of the out-sourcing of mining operations, the intended retrenchments will affect 278 company employees within the mining department. The retrenched employees will receive favourable retrenchment packages from the company, well above the minimum required by legislation, and they will be given preference for employment by Basil Read Namibia.

Importantly, Basil Read Namibia will be engaging over 450 employees for their operations at Skorpion over the next three years and there is the potential for these mining employees beyond three years as Basil Read is a significant and thriving company. These jobs are reserved for Namibians and preference will be given to former Skorpion employees.

In other words, the new mining model will result in the employment of an additional approximately 172 people than is the case now, for at least three years. In contrast, a failure to proceed with the new plan will mean the closure of the mine and the loss of 1,500 jobs from the middle of 2017. These are the only two options available.

Over the past few years, employees have regularly been informed about the life of mine and its impending closure, as well as the various options that are being investigated. Skorpion and VZI have also engaged regularly with the Mineworkers Union of Namibia (MUN) and the Government of Namibia. Meetings related to the expansion process were held with various parties in November 2016 and January 2017, and the formal process as per section 34 of the Labour Act (Act 11 of 2007), including the official notification of the intended retrenchments to the unions, employees and the Labour Commissioner began on 16 January 2017. As per agreement with the union and government, the severance date for affected employees was initially extended from 28 February to 15 March, and more recently to 30 March, to allow more time for the company and union to seek an amicable outcome.

A total of 13 affected employees outside the bargaining unit have already willingly undertaken exit medicals and are in the process of separating as per the latest extended date. Further, the process of absorbing employees internally as identified and per agreement with the unions is ongoing.

Looking forward

The company has and continues to act in good faith and in line with legislation, and with the exception the employees who will absorbed internally, the disengagement of the affected employees from the company is continuing with the final severance date of 30 March 2017.

It is imperative that the work on Pit 112 begins immediately. Delays may have an impact on the technical viability of project. And, as we have said, should the project no longer be viable, the mine will have to close, and all 1,500 jobs will be lost.

General Manager of Skorpion Zinc, Irvinne Simataa, notes that “Skorpion Zinc management continues to engage with affected employees and the MUN for an orderly separation of the remaining employees, and to facilitate any necessary engagement with Basil Read Namibia.

“We understand that this is a period of uncertainty for the affected employees, in fact for all our employees. We can assure them that we will do everything we can to support them during this period of transition, and their re-engagement by Basil Read Namibia should they choose this option. “We also appeal to all employees, the MUN and the Rosh Pinah community to work with us during this process and the timely start-up of the expansion work on Pit 112. We ask all stakeholders to look to the future – rather than the end of Skorpion Zinc, the Pit Expansion gives us a lifeline of at least three years.

“More than that, VZI has committed further resources to exploration and analysis so as to further extend the life of mine beyond the next three years, including possibly underground mining of the oxide resource below Pit 112, conversion of the Refinery to co-treat sulphide ores; the development of Gergarub (JV between Skorpion and RPZC); and ongoing greenfield/brownfield exploration work in and around Rosh Pinah and elsewhere in Namibia which could lead to the discovery of new orebodies.”

“Finally, we at Skorpion Zinc and VZI, would like to wish our employees, their families and communities a wonderful 27th Independence Anniversary. It is our privilege to be part of the ongoing development of the country’s mineral resources.”

For further information, please contact:

Nora Ndopu
Manager: Corporate Affairs and Sustainability
Skorpion Zinc Windhoek Office
Tel: +264 61 241 740
Mobile: +264 811 222 147
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