Zambia's miners paying the price

Privatisation of Zambia's copper industry has left the fate of miners in the hands of a clutch of highly dubious Chinese, Swiss and UK registered companies and negligent contractors. This, despite one of the worst-ever mining disasters anywhere in recent years.

Zambia's Miners Pay High Price For Copper Boom

By Jackie Range of Dow Jones Newswires

12 October 2005

CHAMBISHI, Zambia -Security is tight around the Chinese-owned mine on the outskirts of this town, close to the Congolese border. A visitor passes through two sets of security guards before being allowed to meet managers.

But the nearly 2,000 miners who work on this site have a nearby reminder that the biggest danger can't be stopped at the gate. The graves of 49 workers killed in April in an accident at an explosives plant here lie not far from the entrance.

Zambian miners are paying a heavy price for the global commodities boom that has brought new investment to this country. As miners try to extract more and more copper ore from the ground, the accident rate is soaring.

At least 71 people have died in Zambian mining accidents so far this year, says the Mineworkers Union of Zambia. The Chamber of Mines, the industry body, puts the number of fatalities at 14 in 2004, 11 in 2003 and 14 in 2002.

"We're worried about the accident trends," said Mavuto Gondwe, a union director with responsibility for health and safety.

The mining site here is home to BGRIMM (600980.SH), a Chinese government-owned company that holds 60% of BGRIMM Zambia. NFC Africa PLC owns the rest, and it in turn is controlled by the Chinese government's China Non Ferrous Metal Industries (000758.SZ) with the Zambian government having a minority stake.

The explosion at BGRIMM is the biggest single accident in Zambian mining this year, and some Zambians are complaining that the Chinese have lax safety standards. But the problem is more widespread.

At Mopani Copper Mines, owned by Switzerland's Glencore International AG (GNC.YY), Canada's First Quantum (FM.T) and the Zambian government's ZCCM Investment Holdings PLC (ZCCM.ZM), more than 20 workers have died this year, including six when a cagecarrying miners fell into a shaft, according to the miners union.

The accidents have prompted government investigations into the explosion and into safety in the industry.

Workers blame the surge in fatalities primarily on the increased use of contract workers, who are less well trained than permanent employees of the mining companies.

But the global demand for minerals is also leading companies to push machinery to its limits in order to boost production. And workers complain the companies skip investment in safety.

"At Mopani, the equipment there is really very old, difficult to maintain, and that can cause accidents," said Mines Minister Kalombo Mwansa. "The victims of accidents, the vast majority, are employees of contractors."

Gondwe, of the miners union, said mine owners should be spending more on safety. "I think our friends the investors, they're not doing much in terms of pumping in money where safety's concerned, especially in the mining sector," he said.

Copper is Zambia's most important commodity and production is soaring. The Chamber of Mines forecasts production this year of about 550,000 tons and more than 600,000 tons in 2006. That's up from 257,000 tons in 2000.

As Chinese investment increases, so does attention on its safety standards.

"China has the worst mining health and safety records in the world, and Chinese companies often do not recognize Western standards of corporate governance and responsibility in other countries," said Andrew Gilholm, China analyst at Control Risks.

Major mining companies "are state owned and are not responsible to shareholders or restricted by regulatory and reputational concerns in the same way that Western companies are," he added.

Xu Ruiyong, a manager at NFC Africa whose office is at the mine complex, said there was no link between mining accidents in China and the one here. He declined to take a reporter to the site of the explosion, but said work at the plant "stopped completely" after the blast.

He also said the families were paid compensation.

In a country of 11 million, with only 500,000 formally holding jobs, it's a buyer's market for labor. And with jobs so scarce, surviving family members can be devastated by the loss of a wage earner.

Most of the people killed in the explosion were supporting families, said Clementine Mwangalala. His daughter, Petronelar Namuntenda, 25, was one of the 49 workers who died.

Like the others, her body now rests in a patch of scrubland near the site entrance. The graves are marked with a white name label and adorned with flowers. Tombstones will be erected next year, locals say.

Mwangalala was on his farm some three kilometers away when he heard the explosion at BGRIMM.

"I rushed there to look for my child," he said. "When I reached the place, I found the whole plant, BGRIMM explosives plant, shattered."

Although the company promised compensation, Mwangalala said it hadn't yet come. "They gave some money to help with the funeral," he said. "After that we haven't been given the compensation."

Mwansa, the mines minister, told Dow Jones Newswires that, "the question of compensation is still ongoing... we will be interested to see what has come and what has been given, and how it has been distributed."

With an investigation under way, Mwansa declined to comment on the cause of the explosion. But witnesses said the company ignored safety measures and simultaneously produced two dangerous chemicals, a mining ministry official told Dow Jones.

"The way they (the Chinese) handle their safety factors are different," said the Mineworkers Union of Zambia's Gondwe. "They are much below par."

BGRIMM declined to comment.

But NFC's Xu said the safety record at its Chambishi mine, were "if not the best, I would say almost the best." At the company's mine this year there has been one fatality, he pointed out.

Questions about Mopani's problems were referred to Chief Executive Tim Henderson, who didn't respond to emailed questions, or return calls.

Kaunda Lembalemba, Mwansa's predecessor as mines minister, threatened earlier this year to revoke Mopani's mining license because of safety failures.

Mopani is Zambia's second biggest copper miner. It was once operated by ZCCM, the Zambian government conglomerate that ran the nationalized mines. The difference between the current miners and ZCCM is in part the reason for the accidents, union officials said.

"From what I have seen with Mopani, all the training schools which were created by the former ZCCM, they are no more there," said Gondwe, of the mineworkers union, adding that the miners are trained underground. "As a result, we have seen people going underground, falling into ore passes."

The big increase in use of contractors is related to the problem with lack of training.

According to the Chamber of Mines, employment in mining was 31,400 in 2004, down 30% from 1995. But 37% of the workers today work for contractors. None did in 1995.

Contractors, retained by mining companies to do certain projects at the mine, can cost less than it costs for the companies to themselves hire the workers.

"These contractors, they will go flat out in the compounds, and get a few gumboots from somebody, get an overall from somebody and tomorrow they say, 'you have to go underground and do the job,'" said Albert Mando, national secretary for the National Union of Miners and Allied Workers, Zambia's second big mining union.

Mwansa said the mining houses must end arrangements with contractors who don't teach their employees about safety.

Some of the companies acknowledge that the accidents are a problem.

Sixtus Mulenga, vice president responsible for safety at Zambia's biggest copper mining company, Konkola Copper Mines, said four out of the seven fatalities at KCM this calendar year were contractors.

"Accidents cost money and accidents are bad for business," said Mulenga. Compensation may have to be paid, it's demoralizing, and it hurts productivity, he said. "The workforce begins to feel it's not safe to be here."

The company said it's working with unions to improve safety. London-listed Vedanta Resources (VED.LN) owns 51% of KCM.