In May 2017, I traveled to the Zambian Copperbelt for research. I was excited to be going back to Africa as this would be my first extended stay there since leaving my country of origin of Eritrea in August 2009. Arriving in Kitwe, the town where I would conduct my field research, in some ways felt vaguely familiar. The warm weather, the dusty streets, bougainvillea-lined house fences and the smell of blooming plumeria trees took me back in time to my childhood in Ethiopia. This and the warmth of my Zambian hosts made Kitwe feel familiar.
I would soon learn, however, of the complex socioeconomic and political intersections and interactions tied to the copper commodity that distinguished Kitwe from any African city that I had ever lived in. Copper mining permeates every aspect of life in the Copperbelt. Many a time, I would find myself randomly sitting next to someone who would strike a conversation about copper mining. Almost every person that I interacted with was in some way connected with the copper mining industry. As a Zambian geologist and entrepreneur put it, “if we take the big picture, copper mining has sustained the economy of Zambia. It has brought about the development that you see [in the Copperbelt]. All these towns that are here on the Copperbelt would have not been there if there was no copper mining.”[1]
Copper mining plays a key role in Zambia's economy
With large-scale mining of copper having begun under British colonial rule in the 1920s, the Copperbelt has historically attracted foreign investment and an influx of labor migration both domestically and from neighboring countries, such as Malawi and Tanzania. Revenue generated from mining plays an important role in Zambia’s economy. While other minerals and gems are also extracted in large quantities, copper remains the most prevalent mineral resource.
However, copper mining has undergone significant changes over the last decades, some of which are associated with privatization of the mining companies in the 1990s and increasing financialization of copper trading. The Swiss company Glencore is the parent company of Mopani copper mines, one of the main mining companies operating in the area. Its privatization and increasing financialization signifies that the company’s decision-making process in response to the changing prices of copper prioritizes the interest of the shareholders.
While an argument attributing rights abuse to financialization is a tenuous one to make, as the finance sector becomes a key component of the economy, the primary objective of business becomes the maximization of shareholder value, which relegates the welfare of employees and the community to a less important position. This inevitably impacts the rights of members of the mining community and aggravates already existing poverty and vulnerability.
But then one may ask, is the maximization of shareholder value a legal imperative? The plethora of legal regimes, soft law instruments and guiding principles governing the relationship between transnational companies and various actors and structures interact and operate in a way that favors the maximization of shareholder value.
One argument from agency theory is that the fiduciary duty of executives requires them to make decisions primarily in the interest of shareholders and this trumps over all other interests, and puts the company’s wider and long-term purpose and obligation towards other stakeholders to a less important role.[2]
A counter argument offered by corporate law scholars Stout and Blair is that managers and executives have no legal obligation to promote shareholder value. Instead, they are at liberty to take into account the interest of other stakeholders “even if this adversely affects the value of shareholder interests”.[3] Stout and Blair justify this claim by arguing that the company is a legal person, and hence it is not “owned” per se by the shareholders and that it is also built upon deeper values and purposes other than shareholder value maximization.[4]
Environemental and economic impacts on surrounding communities
Turning back to the stories that I collected during my field research, many of my interviewees emphasized that Mopani Copper Mines PLC is a monolith that only cares about profit maximization, and does not have the interest of the workers or of the community in mind when making decisions that largely impact lives and livelihoods in the region. Some of the ways in which this manifests in the everyday lives of people living in the vicinity of the mines is as follows.
Mopani is in control of huge tracts of land in the Mufulira area. In my interviews with inhabitants of Mufulira, I heard two contrasting stories about Mopani in two different neighborhoods/compounds. First in Kantanshi, a mining compound, I heard that Mopani was a benevolent company that was doing a lot to give back to the community. As part of their corporate social responsibility, they offer some of the land on which they are not mining to communities in the area for the purpose of farming. In addition, they provide lessons on how to farm, seeds, farming technology, fertilizers and so on. These are however either loaned or have to be paid for in some form.
On the other hand, when it comes to environmental or health impact minimization, the mining company would like to be seen to be meeting targets without actually doing enough to make significant or meaningful changes. However, as we can see from what is happening a few miles down the road from this compound, in the neighborhood of Kankoyo, people continue to suffer from the environmental and health impacts ensuing from the sulfur dioxide emissions coming from the mines.
One aspect of labor that may be a result of increased financialization is job insecurity. The conversations that I had with mine workers revealed that they do not feel secure in their jobs at the mines. Many said they are afraid they could lose their jobs at any time due to the volatile nature of the price of copper. There is a trend among the younger generation of miners to take up a second source of income for fear that they would be retrenched at any time should the price of copper go down.
For example, in 2015, 4,300 employees of Mopani Copper Mines were laid off. A story that kept coming up was that many of the miners had taken out loans from banks through the mining company. During retrenchment, their severance package was reduced in order to reflect the loans that they had taken. So, many were left without any money at all. This situation has created a significant hardship to the socioeconomic fabric - breakdown of families, increased poverty, etc.
A year or so later, some workers were recalled and offered contract-based, and temporary work. This practice of hiring without actually offering permanent employment puts the employees in the category of independent contractors whose right to organize in unions is limited.
As the companies resort to outsourcing, casualization and fixed term contracts, they are also effectively subjecting the workers to precarious work, characterized by “low wages, low job security, limited control over workplace conditions, little protection from health and safety risks in the workplace and less opportunity for training and career progression.”[5] This violates Article 25 of the Universal Declaration on Human Rights- the right to a standard of living adequate for the health and well-being, and the right to security in the event of unemployment.
Human rights obligations for businesses
The story of the Copperbelt is not unique. Even though there are several soft law instruments such as the UN Guidelines on Business and Human Rights, all over the world, people’s lives and livelihoods continue to be severely impacted as a result of business decisions driven by corporate greed and power. Some transnational companies have been sued for human rights violations in their home states, albeit with mixed results. In the absence of a legally binding instrument, it is difficult to hold multinational companies legally accountable for not protecting or respecting human rights standards.
While states are primarily required to protect and respect human rights under international law, many transnational companies are now more economically and politically powerful than some states and thus should be required to protect and respect human rights. An intergovernmental working group was established in 2014 to negotiate a legally binding multilateral instrument on business and human rights and negotiated the first (Zero) draft at the fourth round of negotiations held in Geneva in October.
It is unclear whether it will garner enough support from states in order to advance forward. As we celebrate the 70th anniversary of the UDHR, it is clear that the human rights regime needs to accommodate the challenges of the 21st century, including imposing legally binding human rights obligations on businesses.
The research for this blog post was undertaken as part of the project “Valueworks: Financialization along the Copper Value Chain” funded by SNIS (Swiss Network for International Studies) and based at the University of Basel under the project lead of Dr Rita Kesselring.
About the author
Hanna Haile is a visiting fellow at the Centre for Human Rights and Legal Pluralism. Her research and writing interests lie in the fields of international human rights, migration, and sustainability. She was a Steinberg Postdoctoral Fellow on Migration during the 2017-2018 academic year. Her current project explores the experiences of Eritrean asylum seekers and refugees in Canada, with a particular focus on their interactions with the Canadian Legal System to understand the role of law in aggravating or mitigating the precariousness of their situation.
[1] Source: Personal interview with a Zambian geologist/ entrepreneur (July 2017).
[2] Thomas Clarke, “The Impact of Financialisation on International Corporate Governance: the Role of Agency Theory and Maximising Shareholder Value”, (March 2014) Law and Financial Markets Review.
[3] MM Blair and L Stout, “A Team Production Theory of Corporate Law” (1999) 85 Virginia Law Review 247.
[4] Id.
[5] Gerry Rodgers & Janine Rodgers, Precarious Jobs in Labour Market Regulation; the Growth of Atypical Employment in Western Europe, 1989).