Stealing Africa Essay Wylbur Simuusa, minister of mines, is quoted in the BBC 4 documentary Stealing Africa: ‘As a country, as a nation, God has blessed us

Stealing Africa Essay Wylbur Simuusa, minister of mines, is quoted in the BBC 4 documentary Stealing Africa: ‘As a
country, as a nation, God has blessed us with such an abundant natural resource. The paradox is
that Zambia ranks among the 20 poorest countries… We are wealthy yet we are poor. J. of Modern African Studies, ,  (), pp. – © Cambridge University Press .
This is an Open Access article, distributed under the terms of the Creative Commons Attribution
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doi:./SX
Swiss extractivism: Switzerland’s
role in Zambia’s copper sector*
GREGOR DOBLER
University of Freiburg, Institut für Ethnologie, Werthmannstr. , 
Freiburg, Germany
Email: gregor.dobler@ethno.uni-freiburg.de
and
RITA KESSELRING
University of Basel, Ethnologisches Seminar, Münsterplatz ,  Basel,
Switzerland
Email: rita.kesselring@unibas.ch
ABSTRACT
Switzerland is usually not looked upon as a substantial economic actor in Africa.
Taking Zambian copper as a case study, we show how important Swiss companies
have become in the global commodities trade and the services it depends on.
While big Swiss trading firms such as Glencore and Trafigura have generated
increasing scholarly and public interest, a multitude of Swiss companies is involved
in logistics and transport of Zambian copper. Swiss extractivism, we argue, is a model
case for trends in today’s global capitalism. We highlight that servicification, a crucial
element of African mining regimes today, creates new and more flexible opportunities for international companies to capture value in global production networks.
These opportunities partly rely on business-friendly regulation and tax regimes in
Northern countries, a fact which makes companies potentially vulnerable to
* Research for this article has been funded by SNIS, the Swiss Network for International Studies.
We are grateful to all project partners in the Valueworks project. We finished the article as Fung
Global Fellow at the Institute for International and Regional Studies (PIIRS), Princeton
University (Rita Kesselring), and as Visitor at the Institute for Advanced Study, Princeton (Gregor
Dobler); we are very grateful to both institutions for the inspiring writing environment they
offered. Two anonymous reviewers have provided very valuable criticism. Most of all, we want to
thank our Zambian research partners for their hospitality, their interest in our research and their
patience for our curiosity.
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GREGOR DOBLER AND RITA KESSELRING
reputation risks and offers opportunities to civil society actors criticising their role.
New and different Swiss–Zambian connections emerge from civil society networks
organising around companies’ economic activities.
INTRODUCTION: EXTRACTIVISM
This essay is on the economic infrastructure of extractivism and its role in global
capitalism. When analysing extractivism – a reliance of countries on the export
of raw materials that creates economic and political dependence and redirects
profits to other countries (Acosta ; Gudynas ), social scientists often
focus on the sites of extraction: on mines, oil fields or plantations. In African
studies, the topic has attracted renewed interest since China’s economic
growth changed the landscape of global extraction and generated a new wave
of large-scale commodity investments (Womin ; Ayelazuno ; Dobler
; Engels & Dietz ; Schubert et al. ). Scholars have shown the
role played by multinational companies and their managers (Lee ) and
have analysed the relations between large investors, host communities and governments of resource-rich countries (Kesselring a). Environmental problems have found as much coverage as resettlement programmes, corporate
social responsibility measures or labour relations (Kirsch ; Welker ;
Benya ; Dolan & Rajak ). These studies have shown commodity extraction’s enormous impact on people who live around the mines and oil fields, and
have linked this impact to power relations in the global economy.
The political economy of extractivism, however, cannot be understood by
concentrating on pits and wells alone. Between their extraction and their use
in global industrial production, commodities have to be financed, insured,
moved, stored, cleaned, weighed, blended, bought, sold, certified, tracked –
to mention just a few downstream activities. Service providers such as trading
firms, transport and shipping companies, financial institutions, certification
and software providers are as important agents of commodity extraction as
mining companies. These segments of global production networks figure less
prominently in the literature. The ensuing imbalance distorts our image of
the ways in which commodity-exporting countries are embedded into the
global economy.
Using the relations between Zambia and Switzerland as an example, we show
in this article how active international companies are in providing the infrastructure of Southern Africa’s mineral extraction, and how they manage to capture a
substantial percentage of the value created by it. We argue that in order to
understand the consequences of mineral extraction for host countries and
ultimately increase local benefits through regulation and effective taxation,
we need to pay much more attention to these less spectacular, but no less
profitable activities.
We are not the first to argue along these lines. Scholars of global value chains
have long been interested in the different ways value is added to goods along
their journey (Gereffi ), while theorists of global production networks
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SWISS EXTRACTIVISM

highlight the functional role of intermediaries such as financial, logistics and
standard-setting agents (Yeung & Coe : , ). More recently, a new
focus on the ‘servicification’ of global value chains has made clear that manufacturing firms in advanced economies frequently generate a high percentage of
their revenue through service provision (Miroudot ). Most studies on servicification, however, have focused on industries in Europe, the USA and Asia,
and little is known about the extent to which services contribute to value addition in mineral extraction in African countries. We hope that our article
draws attention to this gap and increases interest in the less spectacular sides
of commodity extraction.
Our case study is restricted in focus: we analyse the role of Swiss companies in
Zambia’s copper sector. We concentrate on one commodity and one pair of
countries, and we only include activities downstream of mining that take
place in Southern Africa.
Zambia, currently the world’s th largest producer of copper, is highly
dependent on mining. The extractive sector accounts directly for %, indirectly for up to % of its GDP, and for % () of exports. Despite this,
mining only contributed % to government revenue in , the largest
part coming from mineral royalties (Zambia EITI ).
According to official trade statistics, half of Zambia’s copper is exported to
Switzerland – that is, bought and sold by Swiss commodity trading firms. This
is typical of Switzerland’s role in the global economy. The country has developed into a global trade hub; % of the world’s metals, % of coffee, %
of sugar, % of grains and % of crude oil are today traded via Switzerland
(Lannen et al. ).
When we started our research, we wanted to better understand the consequences of Switzerland’s role as a trade hub for Zambian copper. We soon realised that commodity trade is just one of the ways the Swiss and the Zambian
economy are interlinked. In our description and analysis of these links, we do
not want to single out Swiss companies as exceptional, and we see the danger
that the national focus could downplay global connections of capital. We will
show, however, that a focus on Switzerland makes the general dynamics of
global capitalism more clearly visible. It is a useful heuristic tool for understanding regional disparities and value capture in global capitalism.
Methodically, the article draws on ethnographic research in border and
mining towns in Southern Africa. Gregor Dobler has worked in this context
for the last  years and has done short-term fieldwork for this article in
Chirundu and Lusaka; Rita Kesselring has conducted  months of ethnographic fieldwork in Solwezi and Kalumbila, two new mining towns in northwestern Zambia, and, to a lesser degree, in Mufulira and Kitwe, two old
Copperbelt towns. We both have conducted interviews with a wide range of
industry actors in Zambia and Switzerland, and done extensive desk research
for areas in which we found access difficult.
The article’s structure is simple. After a short introductory overview, we follow
copper’s journey through the main stages of mining, trade and transport
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GREGOR DOBLER AND RITA KESSELRING
logistics. At each stage, we show the extent and manner of Swiss companies’
involvement. A second, shorter part then looks at a different link between the
countries emerging from their economic interactions: solidarity movements
between civil society groups. We show that for companies who use favourable
regulatory environments as a major asset, such critical movements have
become a strategic risk and standard-setting agents in themselves. In the conclusion, we bring these strands together to theorise the role of Swiss companies in
the global partition of labour.
EXTRACTION
Our interest not in mining alone but in copper’s entire production network is
one of the few things we share with Glencore, the best-known Swiss company
active in Zambia’s copper sector. Glencore started out as a commodity trader,
but has by now become an integrated multinational commodity firm. One
major step in this direction has been its investment in copper mines in
Zambia and the DRC since . Glencore’s decision to buy mines in Zambia
was anticyclical and, in retrospect, came at the best possible moment for the
company.
Zambia has had a long history of commercial copper extraction. Under the
British South Africa Company’s and later British colonial rule, its copper
mines were owned by the Anglo American Corporation and the Roan
Selection Trust. In , five years after independence, the Zambian government nationalised the country’s copper mines. In , in response to a long
depression in copper prices beginning in the mid-s, the two state-owned
mining enterprises were amalgamated to create Zambia Consolidated Copper
Mines Limited (ZCCM). ZCCM’s main shareholders were the Zambian government with .% and the Anglo American Corporation with .%. The consolidation could not stop the sector’s decline. In an environment of global
liberalisation and deregulation, increasing external debts and lack of revenue
forced President Kaunda to give in to pressure by the International Monetary
Fund, the World Bank and other lenders to privatise the mines and other
state assets (Simutanyi ; Craig ).
The scope and the pace of the country’s privatisation and liberalisation
program increased under the Movement for Multi-Party Democracy (MMD)
led by Frederick Chiluba (Fraser & Larmer ). In , the Zambian government began unbundling ZCCM into asset packages and selling those to
various investors, while maintaining a minority interest in each new company.
Due to the global price slump of the s, it took until  before all assets
were privatised, after years of hard negotiations, low bids and increased debt.
Glencore acquired a majority stake in Mopani copper mines, the largest
employer on the Copperbelt – comprising Nkana and Mufulira mines, two concentrators, one smelter, one refinery and two cobalt plants. In , Carlisa
Investments Corp, a joint venture between First Quantum Minerals Limited
(FQM, see below) and Glencore International AG incorporated in the British
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SWISS EXTRACTIVISM
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Virgin Islands, acquired a % share in Mopani. Very soon, FQM diluted its
interest in the company, which reduced its shares in the Mopani copper
mines from .% to .% and increased Glencore’s from .% to .%.
The remaining % are still owned by ZCCM (FQM ).
As with all ZCCM assets, conditions for the sale of Mopani were codified in a
secret bilateral Development Agreement later leaked to the public. The agreement defined a ‘stability period’ of  years during which contractual conditions would remain stable. It exempted Glencore and FQM from covering
ZCCM’s financial liabilities (including pensions for ZCCM workers) and environmental legacies, and from paying most taxes (Adam & Simpasa : –).
Although the development agreements ceased to be binding following their
cancellation in the Mines and Minerals Development Act , many of their
provisions remain in place.
Today, Glencore is the fourth largest copper producer by output in Zambia
after FQM, Barrick Gold and Vedanta. It also owns Sable Zinc Kabwe Limited,
a copper and cobalt processing plant in Kabwe (Glencore : ),
Mutanda mine and .% of Katanga Mining in neighbouring DRC.
Glencore’s Swiss history is well known. The company goes back to Marc Rich
& Co AG, registered in Zug, Switzerland in . Rich, by then on the FBI’s 
most wanted fugitives list for charges of, among others, tax evasion, racketeering
and evading US sanctions in trading with Iran, sold his trading business to the
company’s managers in . (He was later famously pardoned by Bill
Clinton on his last day in office, after Rich’s wife Denise Rich had donated
more than US$  million to the Democratic Party.) The new company,
Glencore, went public in  and merged with Swiss mining giant Xstrata in
/. Today, it is the world’s largest commodity trading company.
Glencore plc is incorporated in Jersey and domiciled in Baar, Switzerland.
Shareholders in Glencore plc include institutional investors, such as Qatar
Holding (.%) and BlackRock Inc. (.%), but large shares in the
company are owned by managers, e.g. CEO Ivan Glasenberg (.%) and
Aristotelis Mistakidis (.%) (Glencore : –).
Since the s, Glencore was one of the first major commodity traders to
extend its reach along the value chain – a strategy now followed by many of
the industry’s giants, since margins from arbitrage have declined in an age of
more readily available pricing information (Bloomberg ). Its expansion
into mining has generated many discussions – some of them linked to the economic benefits or dangers of vertical integration, others to the business practices or environmental effects of its mines and smelters. Employees of other
Zambian mining companies we spoke to see Glencore as driven by a different,
non-mining logic (see also Lee : ), while employees of other Swiss
trading companies see Glencore as an opaque and somewhat shady behemoth.
Global copper prices rose six-fold after Glencore’s acquisition of Mopani,
from US$, per metric ton in  to over US$, per ton in
February . After , the price gradually fell to below US $, in
, only to recover to US$,–, at the moment of writing. Due to
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GREGOR DOBLER AND RITA KESSELRING
the privatisation of mining assets and an unfavourable tax regime, little of the
ensuing profit remained in the country. The government’s multiple attempts
to increase revenues from mining have largely failed due to companies’ bargaining power (Manley ; Saunders & Caramento : –).
TRADE
Mining companies based in Zambia do not use copper for production purposes,
but sell their product to other companies. Mines rarely sell copper directly to
economic actors who need physical copper for production. Instead, copper
passes into the hands of specialised traders who sell it on to other traders or consumers. Traders have a double role. On the one hand, they render services to
producers and consumers by allocating copper more cost-efficiently than
either consumers or producers could do on their own. Traders have access to
a large number of producers and consumers and can save on transport costs
by matching supply and demand across different regions of the world; they
finance transport and storage of commodities, allowing producers and consumers to optimise cash flow and save costs; and they can more efficiently
hedge against market risks than smaller actors could, keeping costs for other
actors stable and predictable. For these services, they receive a share of the production network’s overall profits. This share is, at least in textbook economic
theory, smaller than the costs the other actors in the production network
would have without the traders – otherwise customers would circumvent them
and source their copper directly from the mines. Trading firms thus ideally
make the production network more efficient. If their business is centred on
the allocation element of trade, trading firms typically make relatively small,
but predictable profits on each transaction. Their profits add up from high
volumes rather than from high margins.
On the other hand, trading firms engage in speculative trade to increase their
own profits. They try to anticipate price developments and bet against the
markets. In this side of their business, traders are not the agents of either producers or consumers, but act for the interest of capital owners (and their own
bonuses). Traders argue that much speculative trade is in the interest of all
market participants, since it contributes to fair pricing and overall price stability.
Critics however point out that speculative trade creates high risks and contributes to a concentration of profits in the hands of big capital owners while externalising market risks to less powerful investors.
The Swiss trading hub
While mining and, to a lesser degree, industrial production is strictly localised,
commodities can be bought and sold independently of their physical location.
This has allowed Switzerland, a landlocked country without many natural
resources, to become one of the most impor…
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