Zambia Revokes Licenses, Takes Over Chinese Mine for Non-Compliance

---

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Because of the increasing number of resource-based projects being initiated by Chinese companies in Africa, there is a commonly held assumption that the tide from the east is unstoppable, especially when commercial projects are linked with major national infrastructure projects in "sweetheart" deals with national governments. Most national governments continue to welcome Chinese participation.

The wave of Chinese projects isn't likely to stop, but it is going through a wobble in some countries because of the way local labor is treated and the large influx of Chinese nationals to build and man the projects. Terms and execution of payment are sometimes fraught with problems, and the quality of the projects delivered has at times been criticized. Mixed in with the latter could be a measure of competitor jealousy.

It also should be noted that competition is becoming ever stiffer as traditional western investors and new investors from emerging market regions are keen to take their slice of the African resource pie. As China changes its way of developing projects domestically over the heads of local populations, it will be forced to do the same in Africa.

In Zambia, Mines Minister Yamfwa Mukanga has revoked all three mining licenses of Chinese company Collum Coal over poor safety and environmental compliance, and the failure to pay mineral royalties.

The minister said that the government had taken over the running of the mines and would continue running them until a suitable investor is found for the Collum coal mine, which is 325 kilometers south of the capital city Lusaka.

In August 2012, the Zambian police charged a miner with the murder of a Chinese supervisor, and 11 others with rioting and theft during a protest over pay at the Collum mine.

The minister said that the mine had a history of poor safety, health and environmental compliance, mainly due to the employment of non-qualified personnel.

"In some instances, the entire mine has been closed to allow the mine management to comply with mine safety department directives, but there has been no improvement," he said.

There were no medical treatment facilities, such as ambulances or a first-aid station underground. The mine company also had failed to declare it mineral production totals as required of all mining companies under Zambian law, he said.

Last week, Human Rights Watch published its third report in 14 months about alleged abuses of labor rights and safety standards at four Zambian subsidiaries of China Nonferrous Mining Corporation. It also criticized the ministry for making slow progress in holding mining companies accountable.

Chinese companies have invested more than $1 billion in Zambia.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.