Zambia is the world’s 7th largest producer of copper (3.3%) and 2nd largest producer of cobalt (19.7%). Its economy heavily relies on these two minerals, despite serious attempts to diversify the economy. Zambia also has zinc and lead. “Mining contributes $822m to total export.”Resource nationalism” of the 1970s, however, resulted in Zambia not opening any new mines in 25 years and 50% decline in copper production. Zambia thus typifies African mining: a vast array of mineral resources with potential wealth of opportunity for investors, mining organizations and Africans. How do you unlock this mineral wealth given inadequate infrastructure, perceptions of corruption and unfair licensing practices, & high capital costs of establishing or expanding a mining presence in a country with mounting development needs?
Recent new ventures show the state’s policies are fostering change. Since 2008 crisis, Zambia’s “mining revival” has netted $5bn annually. All the mines under care and maintenance during the crisis have resumed operations. Mineral exploration companies include First Quantum Minerals (copper, uranium & nickel), BHP Billion (copper & gold); Era Power Infrastructure Ltd. (coal); Zambezi Resources (copper & gold); Konkola Deep Mining, a joint venture project by African Rainbow Minerals of South Africa and Vale of Brazil plus Vedanta Resources. Opportunities now exist in exploration activities for oil and gas.
The main challenge in Zambia today is whether the industry can contribute to the socio-economic development of the country, to head-off “wind fall tax” and possible future changes in mining regulation. The recent surge in commodity prices places a particular burden on them to improve state revenue and uplift Zambians socially. The state’s promise (per the Mines and Minerals Act of 1995): secure title to mining rights, stability of the fiscal regime, foreign exchange retention, right to market mine products, right to assign, stability in environmental management, international arbitration, and freedom of commercial operation remains credible. FDI must transparently engage the state & host-communities to blunt support for these changes. Zambia’s EITI status should ensure disclosure of payments & received within the industry, improve collections, and enable the public to hold government accountable for the sharing of revenues.