TARA Mines is seeking to reduce its workforce by between 120 and 150 as part of a programme to regain competitiveness. This would bring the workforce to below 600.
A recent analysis of the company's operations shows that ore grade quality is only 72 per cent of its rivals, while labour costs are higher than in 90 per cent.
"Unfortunately ore grades are predicted to fall even further," a report entitled Tara 2005 states, "and, hence, Tara must reduce its labour cost to be competitive".
Even a drop of 0.5 per cent in zinc ore grade, its principal product, will increase production costs by at least $120 a tonne, or 12 per cent.
Over the next six years zinc grades will fall from 7.7 per cent of the ore mined to 7.3 per cent and overall production will fall by 32 per cent from 330,000 tonnes to 250,000 tonnes.
During 1995 labour accounted for 54 per cent of total operating costs. "Therefore, it would be impossible to achieve cost efficiency without addressing labour costs" according to the report.
Tara 2005 has been distributed to the company's 720 employees and the company is to meet SIPTU officers to discuss a voluntary severance package. A Tara spokesman, Mr Colm Conaghy, said that it needs to have new structures in place and redundancies agreed by the end of the year.
Mr John Kane, of SIPTU, said that, given the nature of the business, it has to be accepted that the good years are over. But the union is determined to negotiate a good package for staff.
The terms on offer for those aged up to 57 are five weeks pay for each year of service, plus statutory entitlements, plus £500 for each year of service.
Employees will also be given the statutory rebate that the company receives from the State against its tax liability. This could prove substantial.
For employees aged 58 or more there will be individual retirement packages on offer based on service. These will include provision for an ongoing payment equivalent to double the old age pension until they are 65. They will also, be credited with service for pension purposes up to age 65.
The proposals should bring the workforce down to half the number employed during peak production in the 1980s. However, the mine will still be the largest employer in the area.
For those remaining, the company is seeking to reduce the over time bill by two thirds, change bonus structures and introduce new work practices. This will impact hardest on the mining grades.
"These are not popular changes but are absolutely necessary for us to secure our employment future," according to the report.
The company is "facing an uncompetitive and uncertain future" because overall costs are higher than in two thirds of the world's zinc mines. "Without the necessary cost efficiency improvements our competitive situation will deteriorate further," the report states.
Since operations began in 1977 Tara has mined almost 43 million tonnes and has enough reserves to last another 14 years. However, as much as 10 million tonnes are tied up in pillars supporting the main shafts, haulage, crushing and other plant in the mine.
Exploiting ore in the pillars will require "careful planning and sequencing, and mining rates will be quite low".
The report also states that very good prospects have been found in exploration to the south and west of existing operations but "those potential prospects will never be mined and will remain as just prospects" unless the existing operation is profitable.
