Zambia: Striking The Dragon

Courtesy of The Financial Times, an interesting article on recent strikes at Chinese-owned mines in Zambia.  As the report notes:

Zambia, the landlocked country in southern Africa that is the continent’s biggest copper producer, has been in the headlines a lot since new President Michael Sata won elections last month. Among other things, the country has suspended new mining licenses, temporarily halted metal exports, and is conducting an audit of the mining sector.

All this is being watched closely thousands of miles away in Beijing. China, the world’s largest consumer of copper, has been steadily expanding business ties with Zambia and Chinese miners regularly describe the Zambia-Congo copper belt as a key area where they would like to invest.

China has invested more than $2bn in Zambia, and 300 Chinese companies are present in the county, according to Xinhua News Agency.

But the relationship has not been an easy one, and Sata, a former train station sweeper, was voted into office in part because he is famous for his anti-Chinese stance. In recent years, Chinese mining companies have been criticised in Zambia for their treatment of Zambian workers. At least two protests at Chinese-owned mines ended with Chinese mine bosses shooting and killing some of their Zambian mine workers.

Chinese mines are in the hotseat again, and several Chinese-run mining and smelting facilities have seen collective action since Sata came to power, including a cobalt plant in Chambishi and a copper smelter owned by Sino Metals.

One of the larger strikes was at a copper mine in Chambishi owned by a subsidiary of China Nonferrous Metals Corp. Workers went on strike at the beginning of October asking that their $100 monthly salary be doubled. After two weeks of deadlock and millions of dollars of losses from the closed mine, China Nonferrous told its 1,000 workers last week that they were all fired and had 48 hours to appeal. Zambia’s mining minister promptly arrived on the scene, and the dispute was settled over the weekend. According to local media China Nonferrous agreed to the pay rise and the workers went back to work.

China Nonferrous was forced to back down, and the workers allegedly fired days earlier were rehired as of Sunday night. The event, along with similar strikes at other Chinese mining facilities in Zambia, has raised alarms in Beijing.

Last Friday a researcher from the Ministry of Commerce warned ominously that getting tough on Chinese miners in Zambia could backfire. In an online essay, researcher Mei Xinyu wrote:

Against the backdrop of sluggish Chinese copper demand weighing down on global copper prices, is it appropriate for Zambia’s to regulate foreign investments with potential measures like tax increases, pay rises for Zambian workers and fewer Chinese workers? What if that squeezes investors’ profits to nothing and forces them to downsize production or pull out, dashing the host country’s hopes? Furthermore Western mining companies have the highest-quality projects, whereas Chinese firms, in the words of the Zambian mining minister, have the poorer mines. It is hard to tell whether or not Chinese miners can withstand a more strict policy environment.

For his part, Sata has said he welcomes Chinese investment, past comments aside. And the essay from the Ministry of Commerce probably represents a bit of posturing given China’s hunger for copper.

China’s resources thirst means Beijing has a growing stake in faraway geopolitical events where China would not normally be involved, whether an election in Zambia or civil war in Libya. The striking workers in Chambishi may not know it, but their struggles with their Chinese mining bosses are just an initial tremor in a movement that could eventually reshape the way China engages with the world.

This entry was posted on Sunday, October 23rd, 2011 at 9:55 pm and is filed under China.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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