Mining group Syrah Resources plans to immediately reduce its workforce by about 30 percent at its graphite mine in the Balama district of Cabo Delgado province, northern Mozambique, the Australian group said in an update on its performance in the third quarter of 2019.
The market announcement also said that, in addition to the reduction in the number of workers, currently around 200, and the costs associated with labour, there will be renegotiation of contracts and reconfiguration of the mining and ore processing models currently in force.
This process also includes a reduction in the management structure of the mining operation in Mozambique, which is expected to provide annual savings of US$1.5 million.
All of these cost reduction projects are a result of the current state of the graphite market and the group’s Board of Directors intends to save between 20% and 25% of the US$9 million forecast for the entire Balama operation in 2019.
The statement mentioned that graphite prices in the Chinese market began to fall in the third quarter, that there are uncertainties about its evolution in the fourth quarter of 2019 and early 2020, which has already impacted the renegotiation of product supply contracts.
The group also reported that production at the Balama mine had been reduced to about five tonnes per month in the third quarter of the year, a 17% drop in installed capacity and is expected to fluctuate between 120 and 150 tonnes in 2020, depending on market conditions.
Syrah Resources operates in Mozambique through its subsidiary Twigg Exploration and Mining Limitada. (Macauhub)