Operations at Glencore’s Katanga mine has been suspended since September, as the company tries to apply measures aimed to survive the effects of extremely depressed copper prices, which have dropped to fresh six-year lows this year.
For many, Katanga represents a test of whether the company's copper mining operations can adapt to weak prices. Glencore plans to re-engineer the site so it can resume output at a lower cost in early 2017, and success would help reassure its investors that the firm can ride out a long commodity downturn.
The upgrade will include a new leaching plant that Glencore says will allow the site to process ore more cheaply. But it has not given any more detailed plans on how it aims to cut costs at the mine — owned by Kamoto Copper Company (KCC), a joint venture between Glencore-controlled Katanga Mining Limited and state miner Gecamines.
Some fear most saving will come from cutting down the company’s workforce. When first announced its decision to halt production at the mine, Glencore said it would to reduce a fifth of its around 5,000-strong workforce, at most. However, more than 1,000 workers have already taken up an offer of compensation to walk away.
KCC has targeted annual production of 300,000 tonnes since 2011 but its record output has been just 158,000 tonnes, reached in 2014.
To make things worse, the mine has a hefty accumulated debt. According to annual accounts filing to the local government at the end of 2014, KCC debt was more than $5 billion, of which about $2 billion were owed to Glencore.
Fresh rumours about the future of the mine began circulating in January, as one of the mine main holders, state-owned Gecamines, announced it had signed an agreement with China Nonferrous Metal Mining Company (CNMC).
Under the terms of the deal, the Chinese company committed to build factories at two existing mines in southeastern Congo.
Gecamines first announced a "strategic cooperation agreement" with CNMC last June to discuss future collaboration on five unspecified projects in Congo's southeastern mining heartland.