KINSHASA (Reuters) - Congolese miner Kamoto Copper Company (KCC), controlled by Glencore (LONDON:GLEN), said on Friday it was suspending production of copper and cobalt but would press ahead with a planned $880 million modernisation project to cut costs.
KCC said in a statement it would maintain at least 80 percent of its existing workforce during the shutdown, which was announced this week in Glencore's results.
"The company has analysed numerous options but faces no viable alternative in light of the challenging environment for commodities," the statement said.
It added that KCC would follow through on an existing investment in refurbishments to power plants at the Inga hydroelectric dam in southwestern Congo and transmission lines to the copper-mining southeast of the country.
Glencore estimates that the upgrades will bring down production costs from more than $2.50 per pound to about $1.65 per pound.
The announcement followed a meeting between a Glencore delegation and government representatives on Thursday in the capital Kinshasa. In it statement, KCC said it would take into account the issues raised by the government without elaborating.
Congo, Africa's biggest copper producer, mined more than 1 million tonnes of the metal for the first time ever in 2014. The country's chamber of mines said last month that it expected production to dip slightly in 2015 due to chronic power shortages.
The value of Congo's copper exports, which represents more than half the value of its total exports, fell by 25.8 percent in the first half of 2015 compared to the same period last year as prices fell on the back of fears of slowing demand in China, the world's top industrial metals consumer.
The KCC joint-venture is controlled by the Swiss mining and trading company, while Democratic Republic of Congo's state mining company Gecamines and Israeli billionaire Dan Gertler's Fleurette Group both hold minority stakes.