"King Cobra"'s election in Zambia bites Chinese mining firms

Published by MAC on 2011-10-10
Source: China Digital Times, Wall Street Journal

Metal export licences suspended in October

Chinese mine gives Zambian workers 85% raise after Sata election victory

China Digital Times

28 September 2011

Following the election victory last week of Michael Sata, an outspoken critic of Chinese labour abuses in Zambia's mining industry, Christian Science Monitor reports that one Chinese mine has given employees a sudden 85% pay raise. It appears that the company prepared two different sets of paychecks, to be issued according to the election results.

At the Chinese-owned Chambishi Copper Mine in this Copperbelt town, mine operator Hedges Mwaba, received two different paychecks: one for his usual salary of 2.9 million kwacha ($600 US) and another 4.8 million (about $1000) ....

"What is weird is that I got two pay slips," Mwaba tells the Monitor. "It looks like the Chinese had prepared for any outcome of the election by printing two pay slips for us for the month of September. If the incumbent Movement for Multi-party Democracy MMD [incumbent President Rupiah Banda] had won the presidential election, we would have been paid old meager salaries. But we got almost double the money because the opposition Patriotic Front led by Michael Sata won the election."

The Chambishi mine has seen clashes between Zambian workers and Chinese managers in the past: in 2006, five workers were shot and wounded during riots over a pay dispute, while in 2008 a group of 500 workers attacked managers during talks over working conditions. The mine was also the site of a 2005 explosion which killed 50.

---

Zambia's new President Sata sets new mining rules for China

President Michael Sata, known for hard rhetoric against abuses at Chinese-operated mines in Zambia, says that Chinese firms are welcome to stay if they abide by Zambian labor laws.

By Alexander Mutale

Christian Science Monitor

28 September 2011

Chingola, Zambia - Days after Michael Sata, the populist opposition leader with the anti-Chinese rhetoric, won election as new president of Zambia, Chinese mine investors gave their Zambian employees a raise.

At the Chinese-owned Chambishi Copper Mine in this Copperbelt town, mine operator Hedges Mwaba, received two different paychecks: one for his usual salary of 2.9 million kwacha ($600 US) and another 4.8 million (about $1000).

Mr. Mwaba assumes this was a mistake, of course. But he also says it indicates that the mine owners were worried enough about a possible victory by Mr. Sata's Patriotic Front party that they prepared two separate runs of paychecks: a standard run in case Sata lost, and an 85 percent raise in case Sata won.

Think you know Africa? Take our geography quiz.

"What is weird is that I got two pay slips," Mwaba tells the Monitor. "It looks like the Chinese had prepared for any outcome of the election by printing two pay slips for us for the month of September. If the incumbent Movement for Multi party Democracy MMD [incumbent President Rupiah Banda] had won the presidential election, we would have been paid old meager salaries. But we got almost double the money because the opposition Patriotic Front led by Michael Sata won the election."

As the largest copper producing country in Africa - some $2 billion worth by the end of 2010 - Zambia is more than just another landlocked African country to the People's Republic of China, a country whose ongoing economic expansion have made it the world's largest copper consumer.

Sata's victory has been seen by many as a sign of growing disaffection among Zambian voters who felt that Zambia was not getting a fair share of the mineral deals signed by previous Zambian governments. Some business leaders here fretted that Sata's rhetoric might scare off foreign investment. But for now, the general mood is one of rapprochement, with Sata voicing moderation and Chinese investors promising good corporate behavior.

Soon after Sata's victory, China's new ambassador to Zambia, Zhou Yuxiao, was the first to pay Sata a congratulatory visit, and Chinese President Hu Jintao has issued Sata an invitation for a state visit to Beijing.

Investors won't leave Zambia, says Lusaka-based economic consultant Bob Sichinga, because, frankly, the demand for copper and other minerals is great enough that mining companies have plenty of profit margin to spare.

The Chinese and other investors will not leave because even when mineral royalty and other taxes are raised, the mines will still be making good profit," Mr. Sichinga says. "Government has known that they are not receiving their fair share of mineral wealth. But the new government wants things to change so that Zambians will also benefit."

The sudden pay raise at Chambishi Copper Mine is perhaps a belated effort for Chinese mine operators to burnish their image, an image that has been tarnished by abusive treatment and violence against Zambian employees.

In 2005, five Zambians were shot and wounded by managers during a riot of mineworkers at Chambishi Mine.

Five years later, Chambishi's shootout was repeated five years later by another Chinese-owned company - Collum Coal Mine - when two Chinese managers at the mine shot and wounded 12 miners who were protesting against salary delays. The incident left two miners critically injured and the two managers arrested. But charges against the two managers were dropped when the mine management offered to compensate the injured miners.

In December of the same year, Collum Coal Mine was in the news again when a Zambian miner was reported to have died in police cells after he was detained because of a dispute he had had with one of the mine managers.

Human rights activists in Zambia say that Chinese investors have held the worst record in terms of negligence and abuse of Zambian employees.

A sign of things to come?

Joseph Katema, a Chingola-based parliamentarian from Sata's party, says that the Chinese pay raise at Chambishi is the beginning of better things to come for Zambian mine workers under the Patriotic Front (PF) government, which promised to initiate major economic development changes within the first 90 days of assuming power.

The Chinese mine investors knew the right thing to do under the previous government, Mr. Katema says, but they took advantage of the weak and corrupt leadership of the previous Movement for Multiparty Democracy (MMD) government.

"The Chinese investors are here to make profit, so if they can get away with abusing and, even, not paying workers because of a corrupt or weak government, they would gladly do that," Katema says.

At his meeting with Sata, Ambassador Zhou promised to assist the new government in ensuring that investors of Chinese origin observe local labor laws.

"The Chinese policy is that all Chinese nationals working in other countries respect local labor laws," Zhou said, "they must observe the laws of the land anywhere in the world."

Sata reportedly replied, "When your countrymen adhere to local laws, there will be no need of pointing fingers at each other."

China, ever vigilant at maintaining relations with the government in power, extended an invitation to Sata to pay a state visit to President Hu. Sata's response was cool. "I will respond to the invitation soon," he told Zhou.

---

Copper Miners in Zambia Demand Pay Rise

By Nicholas Bariyo

Wall Street Journal

7 October 2011

Zambian miners at Chinese-owned Sino Metals copper plant in the Copperbelt went on strike Friday as a wave of wage demands continues to spread at Chinese-owned mines in Africa's top copper miner, a union official said.

Speaking by telephone from the copper mining city of Kitwe, Goodwell Kaluba, the general secretary of the National Union of Miners and Allied Workers, said hundreds of miners at the copper plant downed tools Friday highlighting growing impatience with the Chinese-owned enterprises in the country following last month's election victory of President Michael Sata, a strong critic of Chinese investments in Zambia.

"The strikes are spreading, and the miners don't want to listen to their union leaders," he said. Output at Chinese-owned Chambishi Copper Mine has been disrupted since Wednesday following a miners' strike, in which the workers are demanding a 100% wage increment, bringing them into line with counterparts at other mines such as Vedanta Resources PLC's Konkola Copper Mines and Glencore International AG.

Chambishi is operated by Chinese-owned NCFA Mining, a unit of China Nonferrous Metals Corp., which also operates the 150,000 tons-a-year Chambishi Copper Smelter and the Luanshya Copper Mines. Union officials say Chinese-owned mines pay the lowest wages in the country.

Union representatives were due to start labor negotiations with Chambishi management next month for the 2012 labor deal, in which unions are expected to seek a more than 10% pay rise.

Zambia's labor minister said Friday the government would start talks with mining companies over the simmering labor disputes as the country's newly elected leader continues to act on campaign promises of improved conditions of service.

---

Mining in Zambia - One Year After Collum Coal Incident

BY Mary Kay Magistad

The PRI's World

4 October 2011

The road to Collum Coal Mine is covered in sooty black coal dust. I’m here with Huang Lei, a 25-year-old native of Sichuan, who used to work as an interpreter at this mine. As we drive in, Zambians and Chinese alike shout out greetings to him.

“People still remember me,” Huang Lei said. “So it’s like coming back home. I know this place too well.”

Too well, because when he arrived, in late 2009, workers had just rioted. The Zambians complained their bosses beat them; they said their pay was pathetically low and safety procedures lax. Huang Lei said one of the first things he did when he got here was make sure workers got helmets and boots. He left after a year, he said, because he couldn’t stomach the way workers were treated.

Soon after, in October 2010, hundreds of workers protested again, demanding fair pay. Taska Chinko, a coal miner, was in the crowd that gathered outside the gates of the Chinese managers’ living quarters.

He said instead of trying to talk with the workers, two Chinese managers grabbed pellet guns, and began firing on the crowd. Chinko ran, but 12 other miners were injured – two critically. Chinko said he still can’t believe what happened.

“When we saw the management coming out with guns, we felt so bad,” he said. “We’re not like animals, where they have to use guns to keep us away.”

Once the shots were fired, the workers ran amok. They looted one of the Chinese compounds – exactly what the Chinese managers said they’d been trying to prevent.

Eventually, things calmed down. The injured were compensated, and the Chinese managers arrested. A few months later, however, the case was inexplicably dropped and the managers went back to China. And work at Collum coal mine carried on.

Changes Made

The four Chinese brothers who own the mine have made some changes. They’ve doubled salaries, though they’re still below the international poverty line. They’ve also hired a Zambian human resources officer named Corry Moono, who works out of a mud brick room in the corner of the compound.

He said his role is to make sure the company follows labor laws, and to protect the interests of the company and the workers. But he added that’s not how the company or the workers see him; he’s received threats from both.

“The workers say, ‘you’re siding with the Chinese.’ And the Chinese are saying, ‘you are siding with the black guys.’”

But Moono said a little communication and respect go a long way. He said he’s helped avert three near-riots since he came here last year.

“I’ve said, ‘Boys, let’s work together. Our investors are here to make money, and you’re also here to work so you can earn a living.’ I tried to talk to them like that and to some extent, they understood. They haven’t rioted in the past nine months.”

That doesn’t mean they’re happy.

One of the Chinese staff at the mine told Huang Lei, the former interpreter, that the workers are planning to strike again this week. They’re still paid subsistence wages, and they don’t get paid at all when the mine doesn’t need them.

The miner Taska Chinko said he has other complaints, too. For instance, he gets no paid time off, he had to buy his own helmet, and he’s worried about his lungs.

“There’s a lot of dust inside the mine, particularly when they blast,” he said.

Chinko said if he could, he’d find another job, but there aren’t any.

China’s Investment in Zambia

Chinese investment has helped create jobs around the country. Hundreds of miles north, in Zambia’s Copperbelt, Collum’s coal helps fuel Chinese copper smelting. Miners and smelter workers there voice similar gripes to those at Collum.

On payday, after a few swigs of hooch, they voice them loudly.

“I’m a boilermaker. Artisan!” one miner said. “But you see the money I’m making. If I gave you this money could you manage? You can’t!”

The miners wave their narrow white paystubs from the Chinese-owned Chambishi Copper Smelter. Most of them are making less than $200 a month, and they say their rent eats up most of that.

Some Chinese companies protest that they’re paying at least minimum wage, so they aren’t breaking the law. But Goodwell Kaluba, General Secretary of Zambia’s National Union of Mine and Allied Workers, said minimum wage is meant for a safe, sedentary job, like a salesclerk, not for a mineworker.

Kaluba said Zambia’s Chinese-run mines are most often in breach of the country’s labor laws, and have the worst safety records. Still, he’s seen some improvements. He said one big mine, NFCA, used to have fatalities almost every month. For the past six months, there have been none. He said he hopes the trend continues because in many ways, Chinese investment has helped Zambia.

“Some of the youths who were unemployed, they’re now employed. So that’s an area we also need to appreciate. We cannot always talk about negatives,” Kaluba said. “But when we’re talking about safety issues, concerning the life of someone, we need to talk about it.”

Worker’s Rights

Some Zambian workers are surprised to hear that many Chinese miners in China aren’t treated much better. But in China, workers have little recourse. There are no independent trade unions, many mines are state-owned, and the Chinese press is kept semi-muzzled on the subject of workers’ rights.

So it’s a bit of a shock for some Chinese companies to come to a place like Zambia, where workers can protest and strike, and even vote to change the government, which they did just last month. But there are some Chinese companies here that already get it.

Wu Jiang Rong is a project manager for Shanghai Construction Group, a listed, majority state-owned company that does about $11 billion of business a year around the world. He said his company is trying to use more local people in Zambia, even though they’re not as efficient as Chinese workers.

“We try to train the local laborers to improve their skills. A lot of them, when they come, they are general laborers, and after a few months they are painter, carpenter, bricklayer.”

He shows me around the stylish conference center and banquet hall his company has just finished building for the Zambian government. He sweeps a hand to the meticulously painted walls.

“You can see most of the paint work here has been done by them, including the base work,” he said, referring to the local workers. “I’m very proud of them.”

Wu sees his company’s presence in Zambia as a long-term game, so he wants to do high-quality work, treat workers well, and build a good reputation. It’s how world-class companies operate.

There is a bit of a class distinction between the huge, cosmopolitan Shanghai Construction Corporation, and the scrappy Collum Coal Mine, run by brothers from one of China’s poorest provinces, who cut corners at the expense of their workers to earn more now, without thinking of the costs they’ll pay – and have paid – as a result.

As we leave Collum Coal Mine, Huang Lei, said many Chinese companies in Zambia have learned from last year’s shooting incident. Some change has started, and he said he hopes new President Michael Sata will speed it up.

“I hope that he will just force all the Chinese companies to follow the labor law properly.”

Then, he said, Chinese companies, ever pragmatic, will get in line. In this new political climate, the worst of them may start doing the right thing for the wrong reasons – treating workers fairly, to avoid fines and prosecution. But at least that would be a start. The workers at Collum Coal Mine might even consider it a victory.

---

Zambia's president-elect temporarily suspends metal exports permits

Reuters

5 October 2011

LONDON - Zambia's new government has temporarily suspended metal export permits ahead of the release of new guidelines, the ministry of mines and minerals development said in a latest move to increase transparency in Africa's top copper producer.

Newly elected President Michael Sata has been concerned -- analysts say with good reason -- about copper exporters misreporting the amount of ore leaving the country, and last week said that henceforth all export payments would have to be routed via the central bank.

The suspension of permits is another sign of Sata's administration acting quickly on its populist campaign promises.

"All current permits issued by my ministry are immediately suspended pending issuance of new guidelines by the government," Godwin Beene, the permanent secretary at the ministry said in the document, dated Oct. 4 and seen by Reuters.

The new procedures are to be in place by Oct. 16, according to the document addressed to the chief executives of miners operating in the country, which include Canada's First Quantum Minerals, London-listed Vedanta Resources, Glencore International AG and Metorex of South Africa.

Copper accounts for three-quarters of Zambia's export earnings, but the mining industry contributes only about 10 percent of its tax revenue.

According to Zambian figures, much of the copper exports are destined for Switzerland but little of them show up in Swiss customs data, raising questions about transparency.

Former President Rupiah Banda told Reuters in March audits had revealed that the Zambian mining sector owed up to $200 million in unpaid taxes.

(Reporting by Melanie Burton, additional writing by Agnieszka Flak; Editing by William Hardy)