Zambia KCM: Outsourcing Labor To Boost Efficiency, Cut Costs

August 04, 2010 - (Dow Jones Newswires) - Zambia's largest copper miner by output, Konkola Copper Mines, is implementing strategies including outsourcing labor for key activities across its mining and processing operations to improve efficiency and reduce costs, a company spokesman has said.

Despite the better global economic situation, KCM continues to face operational challenges and is looking at ways of optimizing the available resources, to attain maximum efficiency, so as to remain viable, spokesman Rahul Kharkar said late Tuesday.

"The effects of the global credit crunch on the operations are still potent and despite improvements in the price of copper...a sudden collapse of the copper prices would place the company in a highly vulnerable situation," he said in a statement.

 Last week, union representatives met with KCM management over the decision to outsource labor at its Nchanga Smelter which is expected to affect at least 170 miners. Union representatives later criticized the management for not considering the welfare of miners.

However, according to Kharkar, outsourcing isn't intended to make miners lose jobs but to ensure that KCM remains competitive globally.

"This decision is critical to KCM's survival, given the volatility of the metals market. The nation learnt this from the 2008 experience when a crash in the copper price...led to a discharge of thousands of jobs" he said.

According to Kharkar, outsourcing has already enabled KCM to extend the lifespan of Nchanga Open pit by 10 years. The pit was at risk of closure since the late 1990s due to aged equipment and low investment in exploration.

Maxwell Mwale, Zambia's minister of mines and minerals development, told Dow Jones Newswires that the unions have complained to the government about outsourcing and the hiring of expatriates at KCM and the issue has been taken up by the Labor Ministry to ensure it doesn't stir unrest at the mine.

According to Kharkar, KCM has reduced the number of expatriates to 139 presently from 184 two years ago.

"This Expatriate Understudy program is reviewed every month to ensure it remains on track to produce the required results of handing over to qualified Zambians as many jobs held by expatriates as possible," he said.

KCM local miners attacked their expatriate counterparts during a riot over a wage dispute in November last year.

KCM, a unit of London-listed Vedanta Resources PLC (VED.LN) has invested at least $1.5 billion since 2004 in its operations in Zambia and is on course to produce 500,000 metric tons of copper by 2012 up from the current 305,000 tons.