Sepon Mine Workers Face Layoffs

MMG Lane Xang Minerals Sepon workers face redundancies as the company considers reducing the size of its workforce after announcing an end to gold production next month.

The company, which operates the Sepon Copper and Gold mine in Savannakhet province, announced on Friday it was considering reducing the workforce in the mine to maintain a healthy business model after making the decision to halt gold production in December.

“We are reviewing the structure of the operation to ensure we meet the future needs of the business and deliver a solid return to shareholders, including the Lao government,” Sepon General Manager, Mr Rick Watsford, said.

“Unfortunately, redundancies cannot be avoided. “For local employees these will be minimised and mitigated as far as possible through community development and livelihood programmes.”

A representative for the company said workers who were laid off would receive compensation in accordance with Lao labour laws.

MMG Lane Xang Minerals Sepon, a subsidiary of Hong Kong stock market-listed MMG, was unable to confirm the number of workers to be affected by the layoffs, saying it needed time to review the operation and demands of the workforce in the mine.

At present the copper and gold mine employs about 4,000 people, mostly in copper production.

According to a media release from MMG Lane Xang Minerals Sepon, gold production was originally scheduled to cease in late-2011. However, a significant increase in gold prices provided an opportunity to extend production through processing lower-grade ores.

Gold prices have fallen considerably this year and the cost of producing gold at Sepon has doubled since 2012 due to the declining availability and grade of gold ore. Continuing to produce gold at Sepon would be uneconomic, the company said.

“We appreciate the significance of the Sepon gold and copper operation to our people, their families and the broader community,” Watsford said. In 2013, the company expected to produce 40,000 to 50,000 ounces of gold. Yesterday the price of the gold sat at US$1,289 per ounce.

Gold production at Sepon saw continued reductions after reaching its peak 2005, during which it produced about 100,000 ounces a year. In 2012, the company produced 70,000 ounces.

MMG Lane Xang Minerals Sepon confirmed the company would continue to focus on copper production, one of the main sources of company revenue. The company also said the suspension of gold production at the mine would not cause a significant impact to its revenue generation.

“Copper production, which generates about 92 percent of total revenue at Sepon, will continue,” the company said in a media release. “Copper production at the mine remains strong, with a record output of more than 90,000 tonnes achieved in the 12 months to 30 September 2013.”

 Source: Vientiane Times

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