An article in the fall issue of Americas Quarterly, released today, explores the record of Chinese state-owned mining corporations on labor and the environment. In “Do Chinese Mining Companies Exploit More?” three researchers from the Peterson Institute for International Economics (PIIE) explore the impact of China’s foreign direct investment in natural resource extraction in Peru—underlining China’s increasing economic footprint in emerging regions like Latin America.
The article highlights an issue that is of growing concern. Just this month, Human Rights Watch (HRW) released a 122-page report outlining labor abuses by Chinese firms operating in copper mines in Zambia. The HRW paper states that the Chinese firms clamp down on union activity, promote low pay compared to the international average of copper mines, enforce 18-hour workdays, and operate mines with workplace safety concerns. The Chinese embassy in the Zambian capital of Lusaka has flatly denied HRW’s charges.
In comparing the practices of two OECD-owned companies to those of two Chinese companies, the PIIE scholars note some alarming differences in adherence to international labor and environmental standards. For example, the Shougang Corporation, which purchased the Hierro Perú mine in 1992, “angered the local population by cutting the Peruvian workforce in half and bringing in Chinese laborers. It reduced the quantity and quality of workers’ housing, while leaving blocks of homes once occupied by workers vacant in a town with an acute housing shortage.”
Nonetheless, Chinese firms may be treading a different path since the days of their earliest investments. According to the PIIE research, the Aluminum Corporation of China “appears to be working to avoid the behavior of Shougang.” It has not imported labor from China, has conducted public hearings with members of the local community, and has invested in infrastructure and community development.