Saturday 22 October 2016

Kenmare hopeful of end to strike within days at African mine

Paul O'Donoghue

Published 25/06/2015 | 02:30

Michael Carvill, Managing Director of Kenmare Resources PLC.Photo: Tony Gavin 11/4/07
Michael Carvill, Managing Director of Kenmare Resources PLC.Photo: Tony Gavin 11/4/07

Irish mining company Kenmare Resources is hoping to quell a strike that has led to a halt in production at the company's flagship operation in Mozambique in the coming days.

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The firm announced yesterday that production has been suspended at its Moma mine in northern Mozambique due to unofficial industrial action.

The mine is one of the biggest ilmenite mines in the world. Ilmenite is used as a white pigment in the paint industry.

The industrial action was in response to cost-cutting measures, including redu Kenmare hopeful of end to strike within days at African mine ndancies, being implemented.

Earlier this year the Dublin-based firm agreed plans with unions and the Ministry of Labour to make 162 workers redundant in the face of falling mineral prices.

Kenmare says the number of redundancies was reduced from an initial estimate of 350.

One of the conditions of the deal was a reduction in shift allowance, which is understood to be one of the main factors in the strike. It was due to be implemented on a gradual basis from this month.

Speaking to the Irish Independent, Michael Carvill, Kenmare's managing director, said:

"I would be hopeful that it could be resolved in a couple of days, every strike we have ever had has been resolved in a couple of days," he said.

"With that said, strikes are strikes and there is more than one party involved."

He added: "I can understand that people feel disquieted when they see the impact of the falling [mineral] prices [but] an agreement was reached between parties and we haven't diverged from that. The strike is not a union-mandated strike."

He said he was unsure of the number of workers who have taken part in the action. The company said it, employee representatives and officials from the Labour Ministry in Mozambique are now working towards resolving the action.

It marks another issue at the Moma mine for Kenmare this year, following on from the decision it took in April to temporarily repatriate South African workers at the mine amid unrest in South Africa about foreign workers.

Kenmare said at the time it had made the decision to repatriate the workers, who represented 62 of the 1,391-strong workforce at the mine, amid unrest in South Africa regarding foreign workers which has created a reciprocal unrest concerning South Africans working in Mozambique.

Shares in Kenmare dropped by more than 5pc yesterday on the back of the announcement to trade at about 3.7 pence on the London stock exchange.

Kenmare received a watered-down share offer from Australia's Iluka Resources for the company at the end of April, valuing it at about £189m.

Kenmare recorded a loss after tax of $100.8m (€90.7m) and revenues of $174.3m in 2014. The company also recently announced a restructuring of its debt that will see lenders provide up to $50m in additional funding.

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