‘Foreign mining companies in Zambia neglect societal welfare’

Miners in Zambia said that the culture of corporate responsibility by most foreign mining companies operating in the Southern African nation has drastically reduced compared to the era when the industry operated as a conglomerate to maximize on their profits.

Mr Charles Muchimba mine workers Union of Zambia Director of research and information department said that most of the mining companies in the Southern African nation have shown little or less corporate responsibility in areas of operations to maximize their proceeds in the sector.

Mr Muchimba noted that the mines ever since the 1930s and throughout the history of the Zambia Consolidated Copper Mines conglomerate from 1982 up to 2000, the mines established a corporate culture which extended past a workplace involvement. This is in accordance with the paper Mr Muchimba presented during a recent workshop organized by the civil society groups, Caritas Zambia, the Zambia Episcopal Conference and the International Alliance for Natural Resources in Africa.

He said that the employers in the mining industry provided for all employees’ needs such as housing, hospitals and medical assistance, education for children subsidized food, free electricity, water, transport, and all social amenities for sport, recreation and social welfare, as well as clubs in the mining communities which is not the case at the moment.

He added that the mines also encouraged the mushrooming of various economic agricultural and social activities mainly dependant on the incomes of the miners. These included shopping facilities, agricultural establishments for the supply of foodstuffs to the mine areas and other industrial activities.

As early as 1929, the mines became responsible for the provision of housing and hygiene. This form of support or patronage also extended to wages, food and various other social services.

Mr Muchimba said that right from the early days and years of mining investments, it was the duty of the mine managements to provide well-arranged sanitary and orderly compounds to house the employees. The mines also provided for black and white workers adequate hospitals. The mines’ managements also provided a number of food rations for their employees. These provisions included food stuffs like mealie meal, millet, rice, beans, meat, fresh vegetables, peanuts and salt on a weekly basis. Cinema shows were also given periodically.

He stated that European workers were provided adequate and comfortable hospitals with competent medical personnel. European quarters had added facilities such as electric lighting, water and were in general very attractive in appearance compared to the houses for native workers. Additionally, the mining companies also provided and sponsored recreational clubs and infrastructure for tennis, golf, cricket and football. Inter mine contests were encouraged and competitions were arranged even across borders with Belgian Congo.

ZCCM as a company since 1982 when it was amalgamated into one holding company operated a cradle to grave” Corporate Social Responsibility welfare policy. The company had a paternalistic approach to communities providing medical care services, schools and other social amenities, much wider in scope than those offered by the mines during the colonial period. ZCCM managed mine hospitals in 6 of the 8 Copperbelt towns.

While the quality of infrastructure and medical equipment were deteriorating in the health sector, the mining companies maintained good facilities over the last 60 years. These hospitals established themselves as reputable institutions.

In a nutshell, ZCCM hospitals from 1982 to the time of privatization among others; provided medical (preventive and curative and educational services to the benefit of employees of ZCCM, their dependants, its subsidiaries and the paying public; contributed to the national effort in providing medical and educational services aimed at promoting health and education in Zambia; It provided and fostered research in medical and other related fields as well as encouraging the publication of the findings thereof; operated for the benefit of patients as chemists and druggists and as salts, antibiotics, Pharmaceuticals, medicinal and chemical preparation articles and compounds; It also promoted and fostered the training of personnel in medicine and allied fields appropriate to the requirements of the medical and educational trust from time to time, as well as establishing and administering training institutions; and ensured that high standards of patient care were maintained in its units.

There were two hospitals each at Nkana, Nchanga, Mufulira and Roan and one at Konkola, Kabwe and Chibuluma. These hospitals had their own satellite clinics whereby the number of clinics depended on the size of the mining towns. At most of these clinics, patients were the wives and dependants of the employees although the employees themselves were able to be attended to at these clinics.

Mr Muchimba said that today after the complete privatization of ZCCM assets, companies in the mining industry at least have one hospital .Nkana Mine hospital was sold to NFCA while Ronald Ross Hospital in Mufulira and Nchanga North hospital in Chingola were handed to Government. In Luanshya, Roan Antelope hospital was also handed to the government.

He said that the copper mines also provided other services in the form of youth development schemes, womens’ clubs and social work. The youth development schemes were meant to assist youths in the mine compounds or townships to identify the skills they could pursue and formalize as lifelong skills and knowledge.

The youths learnt skills in carpentry, motor mechanics, welding and many other skills. Womens’ clubs concentrated on home craft while social case work agencies preoccupied themselves with investigating social conditions in the mine townships and keeping a register on the composition of the community. The operating divisions of ZCCM sponsored and managed social recreation clubs such as golf, football, cricket, rugby, bowling, squash, angling and boating.

The company also provided cafeteria, bars, cinema halls and social clubs which spread all over the mine townships. In this way mining companies managed the entire life of a worker, as well as the families and people from surrounding communities. In the area of environmental management, water and electricity, ZCCM provided housing, electricity and water for a token contribution. The company managed the environment in the mine townships by maintaining roads, street lightning and waste collection.

At privatization, the fate of social assets was such that the GRZ took the view that ZCCM’s hospitals and the majority of schools and recreation facilities were transferred into private ownership along with the key mine assets. The key intention however was that these facilities were to remain accessible and available to the mine employees and their families.

Mr Muchimba said that all the privatized mine assets have continued the ZCCM policy of providing health, education and training facilities, although it has largely been at a much lower level. A number of clinics in mine townships of these newly privatized units were either sold to private individuals or were handed over into public hands.

It has been argued that consequently this handover of the hospitals and clinics to the government has over the years reduced the welfare of the people as they no longer get the kind of medical attention that they used to get from the same facilities under ZCCM. Some of these hospitals and clinics today have severe lack of food, medical supplies and medical personnel, including doctors and nurses.

He said that although mine companies have continued to provide free medical care to its employees and their dependants, these facilities are now almost beyond the reach of the people in the surrounding communities. With regards to former employees who got retired, retrenched or medically discharged, they are now expected to pay 50 percent of the medical bills rendered following treatment.

The miners’ union noted that today, there is a huge contrast between the ZCCM comprehensive employee’s social welfare attitudes to the current status of the mining industry under private hands. It can be said affirmatively that there has been a complete abandonment of this policy whereby recreation clubs, playing fields, swimming pools, public libraries, community halls, public parks and gardens and the network of a number of social activities and infrastructure were sold or abandoned for lack of regular use at the expense of mining companies.

Mr Muchimba described as a tragedy that many natural resources rich countries have the misfortune of having poor social indicators measuring poverty, squalor, access to education, health and clean water and air. Mining by nature is a big polluter that civil society needs to rise to the challenge to hold mining companies to the tenets of corporate social responsibility. He said that Zambia’s quest to privatize the conglomerate in March 2000 after years of undercapitalization, falling copper production and poor performance of mining divisions of the ZCCM was in accordance with the government policy of the mines and minerals development which called for the competitive management and development of the mining sector by private entrepreneurship.

It was strongly envisaged that the privatization of the mining industry was the most viable alternative to end the steady decline in copper production and raise production efficiency in ZCCM by fresh capital injections, as well as an introduction of new management and entrepreneurial skills. Most non-core assets of ZCCM, such as farms, lodges, dry cleaners, educational and recreational facilities, were sold separately.

Mr Muchimba however conceded that the privatization of the mining industry showed tremendous signs of recovery with massive amounts of funds going into plant rehabilitations, refurbishments, erection and commencement of new smelters, new pits and shafts like Chibuluma South, the Konkola Deep Mining Project and the coming up of brand new mines like Albidon Nickel Mine in Mazabuka and Lumwana Mine in the North Western province.

After decades of decline in metal production, poor mine operations and investments, the industry experienced a recovery of capitalization. Metal production rose from 250,000 tonnes at the close of privatization in 2000 to 338,000 tonnes by 2002, 409,000 tonnes by 2004, 515,618 tonnes by 2006 whereby the value of Zambia’s exports doubled between 2005 and 2006 to reach USD 2.78 billion.

Preliminary data for 2008 indicated that copper production increased by 3.7% to 569,891 tonnes in spite of a global downturn and subsequent sharp decline in metal prices according to the 2009 GRZ National Budget. Preliminary indications suggested that as a result of the global financial and economic downturn production output fell by 14%. Zambia however continued to be an attractive and stable investment destination due to political stability as a result of its democratic dispensation. Although the current global financial crisis may have some time to run and unravel, there are tentative signs that investments are increasing in the mining industry.

The outlook on mining development in Zambia is positive. Activities are expected to expand, new investments shall be made and more mines are up to open in the forthcoming three to five years. He cited among others mines in North Western Province, Southern Province, Luapula and many other areas throughout Zambia that are likely to come up by First Quantum minerals and other investors who are currently undertaking prospecting and drilling.

On China’s increasing investment in Zambia, Mr Muchimba said that the expectations are very high because of the unraveled interest in Zambia’s resources. The economy might therefore experience an upturn again as the global crisis vanishes. The market prices indicate a prosperous new term for the copper industry: it climbed again above US$ 7000 per tonne after dropping below USD 3000 per tonne at the peak of the financial crisis. The copper price is currently hovering around $7,600 per tonne, which is a good price for many mine operators.

Current prospecting and drilling activities are revealing opportunities for opening of new mines for gemstones, uranium and coal extraction in Southern Province, Nickel in the Munali Hills, gold and copper in Chongwe and Mumbwa, diamonds in Mkushi and Mulyashi, as well as further gold and oil explorations especially in the Western and North Western provinces of Zambia.

On mineral extraction, Mr Muchimba noted that the investments into the extraction of natural resources still lack a comprehensive trickle down effect to the local economy in Zambia that might lead to a prosperous upraise of businesses by nationals. Far more, the mines are principally preoccupied with exporting finished metal bars and before an export levy of 15% on the export of concentrates, there was rampant export of concentrates to China, Namibia and South Africa for smelting and refining copper and cobalt concentrates, thus making the mining sector in Zambia to contribute less to development, though creating jobs, improving the infrastructure for transport and production, as well as backing the communities by some social investments. From an economic perspective, there remains the question in how far the mines and their operators are adding value for the national economy despite them exploiting our natural resources.

He said that the situation on the ground is that smelting capacity is now a monopoly of three main smelters, owned by KCM in Chingola, MCM in Mufulira and Chambeshi copper smelter. Chambeshi metals and Sable Zinc in Kabwe are finding it difficult to find material for treatment. As a result of this situation, toll treatment charges for concentrates are said to be double international standards that processing of copper tailings and concentrates needs more investment and competition in smelting and refining.

The picture depicted here shows that the further processing of copper to a big part takes place in foreign countries, to which the copper bars are exported. Therefore, the potential of the Zambian economy to benefit fully out of the abundance of natural resources is not yet completed. Either there are too high production costs in Zambia, which might disincentivise the further processing of copper in between its boundaries or this processing in Zambia is simply denied by the foreign companies for other reasons. In any case it is up to the GRZ to put in place proper policies for further attraction of investments not only for mining, but even for copper smelting and refining.

(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)

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