KCM must behave as a good corporate citizen

By Mr. Trevor Simumba(Associate Director of the Citizens Democratic Party-National Policy Council)

Mining is a global business. The copper mining value chain involves many players including; input suppliers, mining companies, smelters, contracted suppliers of labour, wholesalers, and consumers. Others are governments, labour unions, mining NGO’s, chamber of mines, other business associations, London Metal Exchange, transporters etc. Anything that goes on at KCM affects the whole nation and as the Citizens Democratic Party a party whose philosophy is ‘Putting People First’ it is of great concern to us that KCM is seen to be taking our citizenry for granted, as the MMD government plays a spectator role.
[pullquote]So it is clear that KCM have been doing this as part of their business strategy for a while and their recent denials were simply a smoke screen. What is even more disappointing is the fact that the Mines Department and Labour Department were caught unawares and only responded when the threat of a strike was made by the unions[/pullquote].

Just in the past few days , KCM has not helped its cause by making contradictory statements. In fact, it is a well known fact that KCM has posed significant challenges to the nation from its sale to Vedanta through its usually controversial business practices. Right from the start the sale of KCM to Vedanta has been a source of controversy. The recent spat involving the outsourcing of labour has re-ignited these tensions between the mineworkers and the KCM major shareholders management from India. Although outsourcing has become a widely-used mechanism to drive labour costs down in the mining industry worldwide, it is also a source of considerable conflict with unions and requires clear and effective regulation by Government. In July 2007 the big Chilean State owned mine saw a 35-day strike by roughly half the 28,000 subcontracted workers at Chile’s state National Copper Corporation (CODELCO) which set a precedent for labour rights in the country. Zambia will do well to draw lessons from CODELCO, as it is the world’s largest copper producer, extracting 1.78 million tons of refined copper in 2006, and is the main contributor to Chile’s state coffers. CODELCO is a private enterprise, yet smart negotiations with a government willing to take a stand for its citizens has not impeded Chile’s copper production. We expect both KCM and the MMD government to take responsibility for the clear discontent they are propagating. Inaction by our government will not only make them seem week, but will perilously set a dangerous precedent for future investors, who will feel very free to sideline Zambians.

The CDP National Policy Desk, having researched this pressing matter has discovered that Zambia’s largest copper miner by output, Konkola Copper Mines (KCM), is implementing strategies including outsourcing labour for key activities across its mining and processing operations to improve efficiency and reduce costs, a company spokesman has said. According to the spokesman, as quoted on foxbusiness.com, is has been stated that (per KCM spokeman Rahul Kharkar)“despite the better global economic situation, KCM continues to face operational challenges and is looking at ways of optimizing the available resources, to attain maximum efficiency, so as to remain viable. The sentence to carefully note is “The effects of the global credit crunch on the operations are still potent and despite improvements in the price of copper…a sudden collapse of the copper prices would place the company in a highly vulnerable situation,” he said in a statement.

So it is clear that KCM have been doing this as part of their business strategy for a while and their recent denials were simply a smoke screen. What is even more disappointing is the fact that the Mines Department and Labour Department were caught unawares and only responded when the threat of a strike was made by the unions. The main question one would ask is firstly: What do our labour laws say about outsourcing? And secondly how is the recruitment of expatriates regulated in the copper mining industry? Surely how can KCM even contemplate appointing a foreigner as HR Director for such a large company that employs so many Zambians? Surely the Ministry of Labour must have laws and regulations which must be applied in this case.

Even next door in Botswana and a little further in South Africa there are clear laws on outsourcing and the employment of foreigners in the mining industry with a strong indigenous empowerment law. The key difference we see is that while many of our friends enforce their laws, in Zambia we seem to react only when there is a threat especially when unions threaten to support the opposition.

We as the Citizens Democratic Party, therefore implore the Government through the Ministries of Mines and Labour to enforce the current mining and labour laws effectively. Secondly, KCM must behave more responsibly as Zambia’s largest mining company and be open with their employees on how they would like to improve KCM’s operations. Efficiency does not equal bringing in more expatriates, it should mean better use of local labour resources and ensuring that they company look at the big picture in the long term. It is not in anyone’s interest to antagonise the mine workers in Zambia lest an even worse Government is elected into office on the back of frustrations amongst Zambians. Foreign investors should respect the country in which they gain huge profits while similarly the Government must enforce the law without fear or favour.