Valueworks: Effects of Financialization along the Copper Value Chain

What are the effects of the financialisation of the commodity trading on local lives and what are the policy recommendations to be drawn for Swiss and international regulatory actors?

Project Summary

Over the last 15 years, Switzerland has emerged as a major global commodity-trading hub. Swiss traders take an intermediary position in commodity chains; they connect markets, influence the pricing process and, unintentionally, change the life-worlds of people around the world. The increased financialisation of commodity trading change the way value is ascribed to commodities.

The project will study the way decisions taken in Switzerland interact with these local life-worlds. It will analyse consequences of the financialisation of commodities trade by following one single commodity – copper – from mining pits and the surrounding communities in Zambia through towns and harbours on African transport corridors, through Swiss trading firms and banks to the sites of industrial production and recycling in China. The heuristic focus on one specific commodity will enable a study of reconfigurations in commodity chains, of their global consequences and of Switzerland’s role as one of the most important platforms of commodity trade worldwide.

The interdisciplinary project brings together experts on particular sites of copper’s journey with specialists on commodity chains. In cooperation between researchers based in international universities, Swiss and Southern NGOs and the United Nations Research Institute for Social Development (UNRISD), the project will explore the characteristics of transnational links and their consequences for social dynamics in particular sites.

The findings will contribute to a better understanding of global connections and will have direct results for policy interventions relating to transparency in the Swiss commodity sector, transnational policy coherence and sustainable development in the Global South. The research results will feed into policy recommendation for Swiss and international regulatory actors.

Academic Output

Working Paper

Valueworks: Effects of Financialization along the Copper Value Chain

Based on two years of research in Zambia, Switzerland and China, the interdisciplinary research project Valueworks examined the supply and value chain of one metal, copper, across three countries, Zambia, Switzerland and China. Researchers, NGOs, civil society activists and one international organization aimed to map the actors involved and the “capture of value” along the copper chain linking Zambia to China. Our key interest was the role of Switzerland, host to the world’s most important commodity trading hub, and its impact on lifeworlds along the copper value chain.

While the social and environmental concerns are already well-researched for mining itself, Valueworks has shown that the service infrastructures of global extraction decisively influence the scope for sustainable development in mineral extractive countries. Mining is embedded into a wider landscape of services – transport, trade, financing, insurance etc. – in which decisions are taken that crucially affect the capacity of countries like Zambia to formulate and enforce policies. This global landscape is shaped by actors who span different countries and are able to move between different regulatory spaces.

For all of them, financialization has become a global condition with which they have to deal; at the same time, their actions reproduce and reinforce dynamics of financialization. While the guises and consequences of financialization are manifold, one common thread is the increasing power of capital owners. This power translates into pressure for companies to perform in relation to indices; it changes the relation between ‘physical’ and ‘speculative’ trade; it shifts the power balance between workers and managers in collective bargaining agreements; and it further erodes the capacity of both Southern and Northern countries to effectively regulate their markets. While Swiss traders are responsible for a large part of the volumes being traded within the production network for copper, employment by the sector is relatively small. Nevertheless, Swiss traders’ structural role in the global economy is huge, due to their influence on transnational trading networks, the pricing of copper and their role in facilitating financialization in globalized trade.

This Working Paper offers policy recommendations for Swiss policy makers at regulatory, political, scientific and institutional levels.

Executive Summary

Based on two years of research in Zambia, Switzerland and China, the interdisciplinary research project Valueworks based at the University of Basel and funded by SNIS examined the supply and value chain of one metal, copper, across three countries, Zambia, Switzerland and China. Researchers, NGOs, civil society activists and one international organization aimed to map the actors involved and the “value captured” along the copper value chain between Zambia and China. Our key interest was the role of Switzerland, host to the world’s most important commodity trading hub, and its impact on lifeworlds along the copper value chain.

The Executive Summary offers a summary of the results, some avenues for their practical application, open questions and a detailed list of past activities and past and forthcoming publications. It also lists policy recommendations for Swiss policy makers at regulatory, political, scientific and institutional levels.

Research Team

Rita Kesselring
Coordinator
Universität Basel

Stefan Leins
Co-Coordinator
Universität Zürich

Gregor Dobler
Principal Member
Albert-Ludwigs-Universität Freiburg im Breisgau

Marja Hinfelaar
Principal Member
Southern African Institute for Policy and Research (SAIPAR)

Katja Hujo
Principal Member
United Nations Research Institute for Social Development (UNRISD)

Ganga Jey Aratnam
Principal Member
Universität Basel

Yvan Schulz
Principal Member
Université de Neuchâtel

Christian Busse
Associated Member
ETHZ

Ellen Hertz
Associated Member
Université de Neuchâtel

Usefull Links

  • Swiss Transit Trade and Zambia – special issue in English of the Afrika-Bulletin: https://zasb.unibas.ch/de/zentrum/news/details/news/swiss-transit-trade-and-zambia-special-issue-in-english-of-the-afrika-bulletin/

 

Status

completed

Disciplines

Themes

Regions

Countries

China, Switzerland, Zambia

Host Institution

Coordinator

Year