KUVIMBA Mining House subsidiary, Sandawana Mines, has paid off 300 workers that it laid off owing to the effects of declining global lithium prices, source can report.
As of mid-last year, international market experts had warned that there would be declining mineral prices globally owing to an uncertain economic future in the world’s largest economies and growing geopolitical tensions.
Experts warned that the declining mineral prices would be mostly felt on the platinum group of metals and gemstone markets except for gold which has remained resilient.
However, in November 2023, British-based news agency, Reuters, reported that due to lithium carbonate’s growing supply outpacing demand for the mineral in the world’s largest market for it, China, prices could fall as much as 30% this year. The fall in lithium prices began to be felt globally in the second half of 2023.
In an interview on Tuesday, Sandawana Mines general manager Godwin Gambiza said the decline in the lithium global prices hit hard on the mine resulting in it cutting staff, ‘to protect the business’.
“What has happened is that lithium prices have gone right through the floor to the extent that the prices that are on the market are way lower than the cost of mining lithium ore. So, as a result of that, some measures have been taken to protect the business resulting in the curtailing of operations so that we survive on the stockpiles we have accumulated,” said Gambiza.
“Over time we have accumulated close to a million tonnes of ore, so we cannot continue incurring costs, when there is no outlet on the market right now for the product. For your information, the lithium prices have fallen by 80% and for lithium ore between 2% to 2,5%.”
He said the prices were no longer viable for operations and that there were no sales outlets available for the ore.
“So, as a result, we needed to look into the number of contractors we had engaged. We had engaged about one thousand contractors. We had to remain with a number that matches the operations that are continuing there. We had to cut that number by 300 and remain at 700 contractors,” Gambiza continued.
However, he added that the company managed to clear salary arrears.
“The issue of their money has been sorted out. I signed for the money for their salaries this morning. I am sure they will be getting their money either today or tomorrow,” Gambiza said.
As previously revealed by this paper last July, Sandawana Mines, resumed operations after it shut down years ago due to several reasons, reaching a valuation of US$3 billion, from US$5 million.
The mine, once owned by Rio Tinto, was one of the world’s largest emerald mines, before it shut down in 2010 after production collapsed and it lost markets.
Kuvimba Mining House, which is 65% owned by the government, took over the asset in 2019 and up to July invested US$56 million to make it one of the biggest lithium producers in the world.
Demand for lithium has been exceeding supply for the past few years due to a global push for electric vehicles in which the main raw material for the batteries use in making them is the mineral.