The aim of the WORKINMINING project is to understand the working conditions in which copper is produced in Central Africa, what Marx called the “hidden abode of production”. Marx’s expression is particularly appropriate here, I think, as we use constantly use copper in our everyday life – almost every time we press a switch or a button – without being aware of how it was extracted and processed. As a basic capital good, copper is at the same time omnipresent and to a large extent invisible in our contemporary world.
Relatively abundant, malleable, and resistant, copper was the first metal to be worked to make tools, weapons, or jewels. It was only in the 19th century, however, that its quality as electrical conductor was discovered, and that it began to be used in housing, transport, and communication infrastructures all over the world. Due to the increase of world population, the development of cities, and the growing number of electric and electronic devices, demand for copper rose steadily since then. Over the past century, the red metal has been an essential component of all modernization projects, from the electrification of nations to the so-called “green” revolution of the 21st century.
To some extent, this growing significance of copper in the economy has remained unnoticed as the attention of decision makers, the media, and researchers was turned towards the availability of oil. Yet the global rush for copper preceded the oil era, and will most probably survive to it. In the past twenty years, there has been a copper boom due to the growth of middle-income countries, and the development of new technologies. Computers, cell phones, and other electronic devices not only contain a small amount of copper, but also require more plugs, more cables, more wires. Above all, it is estimated that from three to four times more copper will be needed to construct electric cars than our current gas oil cars.
To meet this growing demand for copper, the mining industry had to dig in ever larger, deeper, and poorer deposits, and prospect areas ever further from the main markets – including, of course, the Central African Copperbelt. The mining of such deposits necessitated in turn constant technical innovations, and an increasing mechanization of production. According to Schmitz, it is above all to face these challenges that large mining groups were created in the US at the end of the 19th century: Only large groups, with high-level capitalization, could cope with the rising costs of mining. The paradoxical effect of this evolution of mining was that, while contributing to their depletion, it has increased the estimated reserves of copper available. Thanks to new capital-intensive technologies, there is no risk to run out of copper in the near future. The question, constantly postponed, is of course to know how long this game can be continued, and at what price?
This narrative of a continuous increase of both supply and demand is far from being reflected in the copper price curve. Economists put forward two main reasons for this gap. On the one hand, while large mining groups dominate the copper market, they have never managed to control it. A significant share of the copper sold on the market comes from recycling, and small independent mines. On the other, supply is not very sensitive to the variations of demand. Given the length of mining projects’ development cycle, it is difficult for companies to adjust supply to changes in demand. This inelasticity of the market opens the door to traders and other intermediaries speculating on the price of copper.
The implication of such intermediaries in the international trade of copper is nothing new. But since the 1980s, the prospect of a continuous rise in copper prices, driven by the demand of Asian countries, has led a growing number of financial actors (banks, pension funds, hedge funds, and so on) to invest in the copper market. Today, the members of the London Metal Exchange clearing house are no longer mining groups, but investment banks. As a result of this process, speculation plays for an increasing part in the formation of the copper price without determining it completely. In the course of the last fifteen years, it has contributed to amplify its ups and downs, but it has not really affected its overall upward trend. Have a look at the lowest price of copper in 2002, 2008, and 2016. It has never ceased to increase, the 2016 price being more than the double of the 2002 price.
This brief return to the fundamentals of the copper economy allows to account for large trends in the mining industry, and their consequences on labour:
First, the increasing mechanization of production over the 20th century has led mining companies to hire an ever small number of ever more skilled, or specialized, workers. Once again, this development is not really new: The mine of Kov in the Congolese copperbelt was already fully automated at the end of the 1950s. If the Copperbelt produces more copper today than in the past, it is above all because it hosts more investors, who invest a larger amount of capital in the development of smaller number of mines.
Secondly, the growing costs of mining have led to the emergence of large groups investing globally. To cope with the (geological, economic and political) risks associated to mining, they have first sought to integrate their activities vertically. Since the 1980s, the emergence of various service companies – often created by former mine employees – have allowed them to change their strategy, and to outsource a certain number of core activities like exploration, mining, or plant maintenance. As a result, the risks of mining have been increasingly transferred to subcontractors and their workers. Generally speaking, indirect workers have a more precarious job, and receive a lower wage, than workers directly employed in mining companies.
Finally, the growing importance of speculation in the industry make long-term investments more and more difficult for the companies that are most dependent on financial markets. This leads of course to growing labour instability in the sector, labour being increasingly viewed as a simple cost variable to be adjusted to changes in the copper price. Since the brief downturn of the copper price in 2011, many investors have pulled out of the market, and the large private companies dominating the sector have faced a severe decline in their market capitalization. To maintain the situation, several mining companies have decided to break some subcontracts, and to retrench part of their workforce. Another outcome of the financialization of mining is that these large private companies tend to sell some of their mining projects when the copper price is low. As the recent development of the Congolese mining sector suggests, the most likely buyers of these projects are Chinese state-owned enterprises – enterprises that are, by definition, less dependent on the financial market and the dictate of shareholder value.