Canada's First Quantum Minerals to lay off 1,480 workers in Zambia

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By Chris Mfula

LUSAKA, Aug 2 (Reuters) - Canada's First Quantum Minerals (Toronto: FM.TO - news) will lay off about 1,480 workers at one of its Zambian copper projects after a reduction in its power supply curbed production, the company's local subsidiary said on Sunday.

"Regrettably a reduction of approximately 1,480 construction jobs will be brought forward at the Trident Project within the first weeks of August," Kalumbila Minerals Limited (KML) said in a statement.

Zambian power utility Zesco Ltd is limiting supplies after water levels at its hydro-electric plants dropped due to drought.

First Quantum Minerals last week shut its Sentinel copper processing plant after electricity supplies to its operations were reduced by 24 percent.

KML, majority owned by First Quantum, is developing the Trident Project which comprises the Sentinel copper mine and Enterprise nickel mine plus associated infrastructure at Kalumbila in north-western Zambia.

The job losses would affect both Zambians and expatriates, KML said, warning of more cost cuts if electricity supplies were not secured.

"If power supply shortages in Zambia continue and cannot be supplemented by imported power, KML will likely need to take further actions to secure viability," the statement said.

The company said all discretionary spending has been stopped, recruitment of 350 new employees is on hold, and the process of closing out contracts to reduce costs had begun.

Copperbelt-based mining companies and their supplier Copperbelt Energy Corp. held a meeting on Saturday to discuss ways of maintaining normal operations despite imminent cutbacks in power supply.

CEC buys electricity from Zesco in bulk and sells it to mining companies including the local units of Vedanta Resources (Other OTC: VDNRF - news) , Glencore (Xetra: A1JAGV - news) and Vale.

On Thursday, CEC told mining firms it would reduce power supplies to mines by 30 percent from Friday but has delayed this until agreement is reached with mining companies. (Editing by Digby Lidstone)