Zambia: behind the Collum coal mine shootings

Published by MAC on 2010-11-22
Source: Caixin

Collum Coal Mine Rife With Problems Before Shooting

By Chen Zhu and Zhang Boling

Caixin*

29 October 2010

Withheld wages and severely poor working conditions were a frequent source of conflict between workers and mine managers

A shooting at a privately-owned Chinese mine in Zambia on October 15 which injured 11 local mine employees and one resident has put Chinese investment in the country between the crosshairs of a labor relations debate. Sporadic strikes and conflicts between local workers and Chinese management had occurred since 2004 due to the disputes surrounding payment and other employment issues.

Two Chinese nationals in the coal mine incident have been charged by Zambian police with attempted murder, although a Chinese Foreign Ministry spokesman said the managers at the Collum Coal Mine had "mistakenly wounded" the Zambian employees.

According to the Chinese embassy source, the shooting happened when mine workers protested against poor pay and working conditions. The Collum Mine promised to pay workers their wages on October 15 but failed to. Around 200 miners protested at the mine and the Chinese managers were not able to communicate with the workers due to their inadequate English.

Caixin learned that the private company's owners have struggled with employee relations for years. In fact, the strife that led to gunfire has roots in chaotic management and negligence toward Zambian laws and mine regulations.

The Collum Mine is owned by Chinese businessman Xu Jianxue, who was a former translator for a trading company based in Jiangxi Province. Xu cultivated connections with Zambian officials during his first stint in the country in the early 1990s and set up a company called Yangtze Jiang Enterprise Ltd.

Xu's company won contracts for several construction projects, and in 2003 he obtained rights to exploit the lucrative Collum Mine. Currently, Xu manages the mine with four brothers and 70 relatives and family friends. Many are former Chinese migrant laborers with few language and management skills.

Collum Mine's business relies on fluctuating demand from local cement factories. It is the only local coal mine in continuous operation; Zambia's state-owned Maamba Collieries Mine was shut down in 2006 due to a lack of capital investment and poor equipment.

Caixin learned that although local laws stipulate that employers should pay workers during busy as well as slow periods, while also providing housing and medical insurance, Xu circumvented these requirements by using temporary workers. Complaints from the local workers fell on deaf ears, and physical abuse of employees was not unusual.

"The bottom line is, don't beat people," Huang Lei, the first translator hired by Collum Mine in 2009 remembers telling Chinese managers in Zambia. But his suggestion was largely ignored.

The local government was aware of poor working conditions at the mine and tried to shut it down in 2006. Bribery and the fact that local workers needed jobs, however, kept local officials from enforcing their own decision.

One year earlier, a shooting at the mine was reported, after managers attempted to disperse protesters by shooting into the sky during a strike.

Business Savvy in Zambia

Collum Coal Mine owner Xu Jianxue is a native of Leping, Jiangxi Province, but he's been doing business in Zambia for nearly 20 years. He enjoys an extensive network of contacts in the Zambian government, partners with brothers and other relatives, and profits from the private sector.

Xu moved to the south-central African country in 1991 as a translator for a construction-assistance team with China Jiangxi International Economic and Technical Cooperation Co. After the company completed a project, Xu stayed behind while the rest of the team returned to China. He then became a labor contractor based in Zambia's capital Lusaka, registering his new company as Yangtze Jiang Enterprise Ltd. The business steadily grew and, starting in the late 1990s, he brought four brothers to Zambia from Jiangxi for a piece of the action.

Yangtze Jiang worked on several government and public construction projects in Zambia, including the Zambia Anti-Corruption Bureau Building, Shimizu Corp.'s secondary education sector projects, the national Presidential Palace, a presidential lounge at an airport, and even a mausoleum for former president Kenneth David Kaunda. Xu's company also benefited from a multimillion-dollar contract awarded to Legacy Zambia Co.'s for a multi-functioned building called Heart of Africa.

Zambia started awarding mineral rights to foreign companies in 2003, and soon a coal mine in southern Zambia on the Zimbabwean border caught Xu's eye.

The mine's previous foreign investors had given up in the face of geological risks around Lake Kariba as well as security dangers in the area. In addition, said a technical manager who worked in the area several years, the mine suffered from poor labor quality marked by a lack of discipline, weak organizational skills and a combative spirit tied to a trade union. Moreover, coal extracted from Zambian mines can be of poor quality, which has scared off major mining companies that prefer more profitable ventures.

Xu, undeterred by the challenges, offered to buy the mine. His company was the sole bidder for a coal facility with an uncertain future. Yet he and his brothers had already pocketed a lot of money from their construction business, and soon the Collum Mine was making money as well.

Just how much the Xu brothers have made by mining coal is a mystery. Main buyers are local cement factories that operate irregularly, which prevents the mine from running at full capacity and often forces temporary shutdowns.

A China Land Resources Network report in 2005 said US$ 1.5 million had been invested in the mine in the two years after production began in 2003. Output totaled 20,000 tons in 2004 and was expected to reach 100,000 tons in 2005 - the year the company stopped publicly reporting production volumes. Sources say the mine currently produces 600 tons a day, or some 200,000 tons annually.

China's Investment Era in Zambia

Zambia's cooperation with China began in 1970, six years after the end of British colonial rule. That's when China started dispatching 25,000 workers to Zambia to build the 1,870-kilometer Tanzania-Zambia railway connecting Lusaka and Dar es Salaam, which gave Zambia reliable rail access to the sea.

In the 1990s, the nature of Chinese investment in Zambia shifted from international aid to corporate behavior. The Chinese government in 1995 changed its foreign aid approach, shifting the main body of Sino-Africa cooperation to business entities from the government, and thus diversifying its foreign assistance model while basing more decisions on economic performance.

The Chinese embassy in Lusaka listed 200 Chinese-funded enterprises in Zambia in 2009, with combined investment of about US$ 880 million. Of this, about US$ 780 million came from state-owned enterprises and US$ 100 million from the private sector, which includes a large number of non-state companies.

The variety of private players means that special problems can arise, and individual companies can be difficult to control. Yet Tao Yong, an Africa researcher for the Chinese magazine Far and Wide Journal, says the Collum Mine is not a private Chinese entity in the general sense, as it is registered in Zambia and has no parent in China. Rather, Xu's company is a hybrid created during a period before 2002 when Chinese workers that had been in Africa from the early days of Chinese aid - and were familiar with the continent - leveraged established connections and channels to start businesses. Many grew and formed unique, locally rooted Chinese enterprises.

Unlike major state-owned enterprises, private Chinese companies are often forced to scrape bones for meat. They operate in areas with weak profitability and low added-value. They often have a hard time avoiding risk, and their operational problems can revolve around disputes over wages, workplace conditions and benefits.

Some of these private companies have counted on protection from the Chinese government in a variety of operational areas.

But a foreign government can't affect the feelings of local workers, including those who sometimes resent what they consider poor treatment at the hands of Chinese bosses. In recent years, resentment levels at private, Chinese-run workplaces has risen in Zambia. And this has repeatedly led to friction between Zambians and Chinese.

[*Caixin is a Beijing-based media group, "dedicated to providing high-quality and authoritative financial and business news"].