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Outsourcing mining operations part of KCM’s survivor strateg
By Mwila Chansa in Kitwe
Fri 13 Aug. 2010, 15:00 CAT
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KONKOLA Copper Mines (KCM) head of corporate affairs Rahul Kharkar has explained that the outsourcing of key activities across the company’s mining and processing operations is part of the mining firm’s survival strategy.
Responding to concerns from the mining unions over outsourcing of key departments at KCM, Kharkar observed that despite the improved global economic situation, KCM had continued to face operational challenges and was looking at ways and means of optimising the available resources to attain maximum efficiency so as to remain viable.
“The effects of the global credit crunch on the operations are still potent and despite improvements in the price of copper, our production remains a major challenge,” Kharkar stated.
“A sudden collapse of the copper prices would place the company in a highly vulnerable situation.”
Kharkar added that since costs and production were the only factors that KCM could influence in their quest to remain globally competitive, the decision to outsource was critical to the company’s survival given the volatility of metal markets.
“The nation learnt this from the 2008 experience when a crash in the copper price at the LME led to a discharge of thousands of jobs from the industry, not just in Zambia but all over the world,” he stated.
“In light of the foregoing, KCM management adopted the strategic decision to out-source key activities, across its mining and processing operations, among a number of other survival initiatives.”
On Nchanga open pit mine, Kharkar explained that it had been under serious threat of closure since the late 1990s up to mid 2000s, mainly due to aged and obsolete equipment, coupled with low investment in exploration.
He explained that as a direct result of the strategic decisions taken in recent years, including outsourcing 80 per cent of entire operations and maintenance activities, KCM had extended the life of open-pit mining at Nchanga by more than 10 years.
He stated that the companies engaged to operate the outsourced open pits were able to mobilise, at short notice, some of the most modern mining equipment, such as the 300tonne pay load dump trucks, currently the largest in Africa.
“This feat would have cost KCM both time and huge sums of money to execute,” he stated.
“As a result of the decision to contract Moolmans of South Africa and U&M of Brazil, KCM has for the first time in years, managed to run four pits instead of the traditional two,” he added.
“The upshot has been a spike in production so much so that for the first time in years, the company is able to stock one million tonnes of ore ahead of the last rainy season.”
He further stated that some of the world-renowned and highly reputable contractors had already demonstrated superior wage structures to KCM and had helped in fulfilling the company’s desire to bring a new standard and core competence in Zambian mining through strategic outsourcing.
However, Kharkar maintained that KCM was not outsourcing any labour.
Kharkar added that KCM management was also committed to ensuring that the Zambianisation programme worked and that they had already reduced the number of expatriates from 184 to 139.