Dear Minewatchers,
I wanted to leave a couple of comments on the recent posts about renegotiation of the development agreements (DAs). First of all, a big thank you to the MineWatchZambia blog for keeping us foreign observers up to date with what’s happening on the ground in Zambia. By making several of the key development agreements available, Professor Lungu and Mr. Fraser have indeed made a key contribution to the debate on state-investor contracts, recognised as fundamental to the end-of-the-day impact that foreign mining companies have on a host-country’s development (for an international discussion of the links between state-investor contracts and development, please see www.iied.org/pubs/pdf/full/16007IIED.pdf)
We should welcome the current attempt to clarify the positions of the mining companies by asking (via the Chamber of Mines) what companies consider to be their rights and responsibilities vis-à-vis the Zambian state and its people (as reported by Professor Lungu on the MWZ blog). In fact, a better understanding of how mining companies perceive the legitimacy of their social and environmental commitments to the Zambian government is necessary if the two parties are ever to meet half-way at the (re)negotiation table. The MWZ blog has noted that the General Manager of the Chamber of Mines will at some point appear before the Parliamentary Committee to respond to these questions on behalf of the mining industry as a whole, which should be interesting. I think a possible concern, however, relates to the internal differences among the mining companies regarding their interpretation of the DAs (as suggested by the For Whom the Windfalls report). This would suggest that explanations need to be sought also at the company level, in addition to the industry level (after all, the companies each have unique – albeit very similar – DAs). To complement public engagement with the mining industry, perhaps further research into the company-specific interpretations of the policy environment may provide useful clues as to how government and other stakeholders can target their efforts at pushing for renegotiation. I aim to explore these issues as part of my doctoral research in Zambia starting in July, any observations of relevance will of course be reported here on the MWZ blog.
My second comment concerns the need to end the culture of secrecy referred to by the For Whom the Windfalls report. Government must realise that making DAs and other reports publicly available can be a way to complement its own capacity for enforcing regulations of mining firms. As the report notes, DAs commit companies to provide certain social services, environmental management plans etc. – conditions which in many cases seem to have been ignored by the companies. It can be argued that these conditions have been ignored because firms have been able to “get away with it”, i.e. because monitoring and enforcement has not been forthcoming. It seems to me that the need to tap non-state efforts at monitoring of local regulation (by making public regulatory contracts) may be of particular importance in the context of Chinese investors: the Chinese foreign policy of non-involvement appears to translate to a stance where regulations are left entirely to the host state – for example if the host state does not ask for an environmental impact assessment, no such assessment will be undertaken. This should be contrasted with the approach of other investors: it is likely that firms financed by the World Bank/IFC, or by Western banks guided by the Equator Principles, face certain pressures external to Zambia’s policy context, requiring them to adhere to basic social, environmental and reporting standards. The recently announced Chinese $800m special economic zone to be established around Chambishi (see for example http://allafrica.com/stories/200702050690.html) points to the need of ensuring that any contracts governing the split of rights and obligations between state and investor are debated openly.
Speaking of the Chinese, Bert Manders has noted in a previous post that it is surprising to see the Zambian government being so soft on general misconduct at Chambishi and the riots and BGRIMM incident in particular. It is indeed unfortunate, but perhaps it is not so surprising – where Chinese investors are state-owned, government’s relationship with these investors become fungible with other China-Zambia agreements relating to aid, trade and other cooperation. Hence the bargaining power of Chambishi mines vis-à-vis the Zambian government is not just that they bring in a certain amount of capital to upgrade the mines, employ a certain number of people etc. Rather it may be seen as being linked to wider Chinese economic and political interests. Any attempts to challenge NFC Africa by strengthening regulation, making contracts public etc, might be seen as jeopardising much more than that one mining investment. If so these attempts can be expected to lead to some opposition from those in government who benefit from Chinese engagement.
University of Bath
d.haglund@bath.ac.uk
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