Abstract
This article focuses on the distinctive nature of Chinese FDI in Africa, specifically copper mining value chains in Zambia and local sourcing linkages. In order to secure supply, China has become a substantial foreign investor in the Zambian copper extractive sector acquiring control over copper mines, smelters and processing industries. The expectation is that the Chinese mines would operate as enclave operations concerned only with securing raw materials for its industrial and infrastructural needs, and promoting exports from Chinese companies. In this article, we analyse and compare the Chinese copper mines with Northern and South African mining companies in Zambia in terms of the distinctive manner in which their supply chains operate. We do this by examining the role of linkages between mining activities and local suppliers in terms of access, delineation of critical success factors and upgrading strategies.
Abstract
Cet article met l'accent sur le caractère distinctif de l’IDE chinois en Afrique, en particulier dans les chaînes de valeur du secteur cuprifère zambien et les chaînes d'approvisionnement locales. Afin de s’assurer un approvisionnement, la Chine est devenue un important investisseur étranger dans l'industrie de l'extraction du cuivre en Zambie, où elle a acquis le contrôle de mines, de fonderies et d’usines de traitement. On s’attend à ce que les mines chinoises fonctionnent comme des opérations en circuit fermé, ne cherchant qu’à satisfaire les besoins en matières premières des industries et infrastructures de la Chine et à promouvoir les exportations de ses entreprises. Dans cet article, nous analysons et comparons le fonctionnement, en Zambie, des chaînes de valeur dans les mines cuprifères contrôlées par la Chine, d’une part, et dans celles contrôlées par l’Afrique du Sud et les pays du Nord, d’autre part. Pour ce faire, nous examinons le rôle des liens entre les activités minières et les fournisseurs locaux en termes d'accès, de facteurs-clés de réussite et de stratégies de valorisation.
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Notes
One of the largest producers was Indian-owned Konkola Copper Mines. However, little data have been collected on its operational dynamics. It appears to operate very differently from both Chinese and traditional mining companies in terms of supply chain access and supplier relationships, as it adopts a purely market-based relationship with suppliers (Fessehaie, 2012a).
There was a remarkable level of consistency between traditional buyers in their ratings of CSFs, with the exception of suppliers’ flexibility. The South African buyer rated this requirement higher than other buyers. This could be explained by the smaller size of their operations, which increased their reliance on JIT production.
A comprehensive discussion of the impact of firm governance on suppliers’ performance and upgrading processes can be found in Fessehaie (2012b).
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Acknowledgements
The authors thank two anonymous referees, Raj Narula and Raphie Kaplinsky, for helpful comments on previous drafts. This article derives from research undertaken by the Making the Most of Commodities Programme (www.commodities.open.ac.uk; www.prism.uct.ac.za).
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Fessehaie, J., Morris, M. Value Chain Dynamics of Chinese Copper Mining in Zambia: Enclave or Linkage Development?. Eur J Dev Res 25, 537–556 (2013). https://doi.org/10.1057/ejdr.2013.21
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DOI: https://doi.org/10.1057/ejdr.2013.21