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mining

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Regular readers of Pambazuka News will remember a debate held a year or so ago in its pages between the US-based NGO Human Rights Watch (HRW) and ourselves about a lengthy report that HRW had issued on labour rights violations of copper mining firms in Zambia owned by the Chinese state-owned enterprise China Non-ferrous Metal Mining Co. (CNMC). http://www.pambazuka.org/en/category/features/78660; http://www.pambazuka.org/en/category/features/79570; http://www.pambazuka.org/en/category/features/79602

HRW has recently published an update on CNMC subsidiaries in Zambia. The update compounds the empirical and methodological errors of its 2011 report. Instead of broadening its study to include labour rights violations at other foreign-invested copper mining firms in Zambia, HRW again singles out Chinese-owned companies and ignores the situations at other (Western-based) firms, as well as the factors that distinguish the copper mines and smelters owned by the Chinese state-owned CNMC firm from those owned by non-Chinese firms. Rather than conduct a genuine comparative study, HRW sees what it wants to see and thus again fosters the entirely predictable result of feeding anti-Chinese sentiment in Zambia — with its history of anti-Chinese incitement by the now-ruling Patriotic Front — in Africa generally, and internationally.

The update, like the 2011HRW report, especially focuses on safety and implies that the Chinese-owned mines are markedly less safe than other foreign-owned copper mines in Zambia. Indeed, HRW headlines the update ‘Zambia: Safety Gaps Threaten Copper Miners; Government, Chinese State-owned Subsidiaries Make Uneven Progress.’

As we have pointed out in our several responses to HRW’s 2011 report, industrial accident specialists hold that the key indicator of safety is the fatality rate. Until 2012, the two CNMC mines in Zambia were entirely underground (UG), while all other foreign-owned copper firms’ mines in Zambia were either surface (open-cast [OC] or open pit) or mixed UG/OC. All over the world, UG mines are much more likely than OC mines to produce mining fatalities and serious injuries. Officers of Zambia’s Mine Safety Department (MSD) we interviewed in 2012 estimated that UG mines in the country were 8-9 times more likely than OC mines to produce such grave accidents; our own calculations, based on separating fatality statistics of Zambia’s UG and OC mines, produced a 7.7:1 ratio. Yet, the fatality rate for the CNMC-owned mines is not significantly worse than for the other foreign-owned mines. That means that when the difference in the kind of mines owned (UG, OC or mixed) is taken into account, the CNMC mines are at least as safe, if not much more safe, than those of other firms. HRW wholly ignored this factor.

In its update, HRW implies that its 2011 report should be credited for ending certain human rights violations at CNMC’s Zambia facilities. That is deceptive. First, we have shown, in our responses to the 2011 HRW report regarding long hours at part of the CNMC-owned smelters, that employees at almost all other foreign-owned mining firms in Zambia also have long hours and, in more than one case, such long hours affect a much larger proportion of their workforces than at CNMC smelters, which employ only 20 percent of CNMC’s Zambia workforce. Second, 12-hour shifts at CNMC’s Chambishi Copper Smelter (CCS) are identical to those at the smelters in Zambia (Mopani Copper Mine Mufilira, owned by the Switzerland-based metals giant Glencore) and Australia that use the same ISASMELT technology that CCS uses. That is in part because ISAMELT technology is deemed to work best with two, rather than three shifts per day. For example, we were told that Yunnan Copper Co Ltd, which co-owns CCS with CNMC, used to have three shifts, but had to switch to two when they adopted ISAMELT technology.

In part, the longer hours at CCS are also because itsis a relatively new facility that has insufficient qualified supervisory personnel to cover three shifts. Yet without being bothered with a comparative research, HRW only singles out CCS and thus makes it appear uniquely abusive. The 12- hour shifts at CCS and at many non-Chinese owned mining facilities in Zambia may be deplorable, but in the case of CCS, they hardly amount to intended human rights violations, especially in the Zambian and African contexts, which feature much more serious rights violations.

Third, the Deputy CEO of CNMC’s Sino Metals Leaching Zambia (SMLZ) plant told us that the reason why shifts there were shortened to 8 hours was because CNMC was to issue its July, 2012 Initial Public Offering.

On the recognition of only one union at CCS and SMLZ (until late 2011), we have noted in our earlier critiques that there is agreement among officials, union leaders, academics and others in Zambia that workers in any given workplace are better off being part of the same union and that the leaders of Zambia’s two major mining unions differ only in that each thinks that their own union should be the exclusive bargaining agent. HRW, as a US-based organization, well knows that US labor law requires that one and only one union be the exclusive bargaining agent. No one regards that as a human rights violation; indeed, US unions fought hard for that result.

US-based HRW has adopted the arrogant approach of US political elites in refusing to acknowledge that anything is wrong with its report on Chinese copper mining in Zambia. Our findings show that all foreign-owned mining houses are exploiters of Zambian workers and Zambian resources, but CNMC is neither the worst abuser nor the super-exploiter. In a monograph that has recently been accepted for publication, we will show in much greater detail than we have thus far had space to provide, that HRW’s approach is shoddy social science and part of the one-sided China-in-Africa discourse that is promoted by the mainstream Western elites.

* Barry Sautman teaches at Hong Kong University of Science & Technology while Yan Hairong is at Hong Kong Polytechnic University

PAMBAZUKA NEWS

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Copper output in Zambia is expected to rise to 1.5 million tonnes in 2017 from 800,000 tonnes this year due to increased investment in the mining sector. The projection is due to new projects coming on stream and expansion of Lumwana Mine, First Quantum Mineral’s USD 2 billion Greenfield Trident project.

Other projects are China Nonferrous Mining Corporation’s USD 832 million copper projects and the Lubambe mine jointly owned by Brazil’s Vale, African Rainbow Minerals and state owned, ZCCM Investments Holdings. Copper output should rise from 800,000 tonnes this year to 1.5 million tonnes in 2017 as foreign companies invest in expanded capacity.

Foreign mining firms plan to invest another USD 3 billion in the sector in the next three years. The Patriotic Front government has doubled the rate of copper related royalties to six percent in the 2012 budget but many operators maintain their generous development agreements secured when they first invested.

Copper’s contribution to the overall tax take is minimal and only First Quantum owned Kansanshi Copper mine has paid a significant amount of corporate tax. To boost revenue collection, the government announced that from 2013 the capital expenditure deduction rate will be reduced to 25 percent from 100% and only from the year the capital asset is brought into use.

Mr Miles Sampa deputy Minister of Finance said that “The focus now is to boost the capacity of government institutions led by the Ministry of Mines so that we ensure total compliance of mining companies to the existing legislation.”

Mr Jeyakumar Janakar CEO of Konkola Copper Mines said that changes in the mining sector’s tax incentives negatively affect the performance of the expansion of the industry. According to the Chamber of Mines copper output is expected to hit 1.5 million tonnes in the next 5 years due to new projects in the mining sector and expansion of some mines.

Mila Kunis at the Oz the Great & Powerful London premiere wearing Gemfields Zambian emerald earrings by Dominic Jones.
Mila Kunis at the Oz the Great & Powerful London premiere wearing Gemfields Zambian emerald earrings by Dominic Jones.

At the London premiere of Oz The Great & Powerful on Thursday night, newly-announced Gemfields brand ambassador Mila Kunis wore GemfieldsZambian emerald earrings by Dominic Jones and a Gemfields Zambian emerald ring by Alexandra Mor.

Kunis recently returned from Africa, where she toured Gemfields’ Zambian mine, Kagem, which produces approximately 20 percent of the world’s emeralds.  She learned about the company’s environmentally-friendly mining practices and visited several Gemfields-sponsored community projects, including schools and a farming cooperative.

 “While in Africa, I learned that the entire journey that each Gemfields stone takes is carefully considered and that the environment and the local communities where its mines are located are held in the highest regard,” said Kunis. “I truly believe in Gemfields’ mission of ethical mining, and I absolutely have fallen in love with the rarity, beauty and history of emeralds.”

Abut Gemfields

Gemfields is the world’s foremost coloured gemstone producer and is found at the intersection of exploration, mining and marketing. Its focus – reliable and ethically-produced coloured gems – upholds fair-trade practices while remaining in accordance with the highest level of environmental, social and safety standards. Gemfields’ unprecedented mine to market strategy through transparent partnerships with the world’s leading coloured gemstones dealers and manufacturers is a guarantee of the provenance of every gem. Business aside, Gemfields’ dedication to preserving the environment, nurturing relationships with local communities and upholding human rights remains paramount.

About Kagem Mining

Kagem Mining Ltd in Lufwanyama is part of the Gemfields group of companies, a leading gemstone miner listed on the Alternative Investment Market (AIM) of the London Stock Exchange (ticker: ‘GEM’). Gemfields owns 75 percent of the Kagem mine, in partnership with the Zambian government. In addition to the Kagem emerald mine, Gemfields has a 50 percent interest in the Kariba amethyst mine in Zambia. The company also owns controlling stakes in highly prospective ruby deposits in Mozambique and various licenses in Madagascar including ruby, emerald and sapphires deposits.

Gemfields is the world’s foremost coloured gemstone producer, and is found at the intersection of exploration, mining and marketing.

Natural gems are at the heart of the operation. Its focus – reliable and ethically-produced Zambian emeralds – upholds fair-trade practices while remaining in accordance with the highest level of environmental, social and safety standards. This mission holds true for every gemstone in its portfolio.

Gemfields’ unprecedented mine-to-market strategy through transparent partnerships with the world’s leading coloured gemstones dealers and manufacturers allows it to guarantee the provenance of every gem: Its promise to both the trade and the consumer.

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LUSAKA— FIRST Quantum Minerals may see Zambia’s state-owned mining firm become its second-biggest shareholder if it converts a stake in the continent’s largest copper operation into equity.

ZCCM Investment Holdings would “hopefully” decide this year, said CEO Mukela Muyunda. ZCCM is 88% owned by the government of Africa’s largest copper producer.

If ZCCM decides to exchange its stake in the Kansanshi mine, near the Democratic Republic of Congo border, for First Quantum shares, it could end up owning about 10% of the company, said Stifel Nicolaus Canada analyst George Topping.

BlackRock, the world’s biggest money manager, is First Quantum’s largest owner, with about 12%, according to data compiled by Bloomberg.

“We would be happy if ZCCM becomes a shareholder in First Quantum as part of a step in transforming ZCCM into a sovereign fund,” John Gladston, a Zambia-based spokesman for First Quantum, said on Tuesday.

“It is something First Quantum would be willing to accommodate.”

Zambia sold most of its mining industry to private investors between 1996 and 2001, maintaining stakes from 10% to 21% in companies, which it holds through ZCCM. That reversed a nationalisation process that took place in the 1970s.

ZCCM first said it was considering swapping its Kansanshi stake for shares in First Quantum in December. The company sold its 2.28% stake in Equinox Minerals to Barrick Gold for more than $160m in 2011, having paid $30m for the shares five years earlier.

Mr Topping bases his calculation of the shareholding ZCCM may get in First Quantum on a $5.4bn valuation of the Kansanshi mine. Kansanshi is worth about $6bn, Nomura International analyst Patrick Jones said in a January 16 research report. First Quantum has a market value of C$9bn ($8.8bn).

Finance Minister Alexander Chikwanda declined to comment.

Bloomberg

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MopaniZAMBIA’s mining contribution to the Gross Domestic Product (GDP) is projected to grow to US$1.35 billion by the year 2015, due to increased mining activities.

According to the Zambia Extractive Industry Transparency Initiative (EITI), reconciliation report, contribution to GDP was expected to grow from $590 million in 2010 to $1.35 billion in 2015.

Last week, the Government launched the EITI third report based on the 2010 financial year, which showed that mining revenue was up to KR3.787 billion as compared to KR2.572 billion in 2009.

The report said the mining sector was a crucial part of the Zambian economy, with direct contribution being approximately 11 per cent in 2010.

The report said in 2010, the mining and quarrying sector accounted for 9.9 per cent of Zambia’s real gross domestic product (GDP) compared with a revised 9.3 per cent in 2009.

“The country’s real GDP increased by 7.6 per cent in 2010, mining and quarry accounted for 18 per cent of the increase,” the report said.

It was highlighted in the report that copper exports accounted for 78 per cent of Zambia’s exports in 2010 which amounted to about US$5.8 billion.

The value of cobalt exports was estimated to be US$304 million which accounted for four per cent of Zambia’s exports, while imports of oil stood at about US$618 million in the period under review.

On the global front, Zambia continues to be a significant producer and also a major resource of both copper and cobalt.

The report said in 2010, Zambia was ranked as the 7th largest producer of copper in the world.

Further, the Business Monitor International had projected that Zambia’s copper production would reach 1.3 million tonnes in 2015, which would likely place it among the top five copper producers in the world.

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Chief Government Spokesperson Kennedy Saken
Chief Government Spokesperson Kennedy Saken
Government says the cancellation of the mining license for Collum Coal Mine Limited should not be mistaken for nationalization.

In a statement made available to ZANIS today, Chief Government Spokesperson Kennedy Sakeni said the action by government is merely a cancellation of the Mining License due to the breach of the Mines and Minerals Development Act number 7 of 2008 by the company.

Mr. Sakeni stated that the cancelation followed the issuance of several notices to the company by the Mine and Safety Department, which the mining company’s management repeatedly did not comply with.

He explained that the Mines and Minerals Development Act Number 7 of 2008 empowers government to cancel mining rights, saying the cancellation does not affect any liability that the holder of such a right incurred before the annulment.

Mr. Sakeni who is also s Information and Broadcasting Service Minister noted that in the case of Collum Coal Mine, the Director of Mines had ensured that all assets of the Mine were applied towards pre-cancellation liabilities.

He stated that once a mining License has been cancelled, the area reverts back to government, and is available for reallocation to applicants by the Mining Advisory Committee, on a first come first save basis.

Mr. Sakeni said the involvement of the Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH) is therefore not government takeover, saying ZCCM-IH applied for the mining rights following the cancellation of the mining license from Collum Coal Mine.

He added that the withdrawal of the license was done in national interest and in line with the law.

ZANIS

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