President of Zambia Hakainde Hichilema, often referred to as ‘HH’ in the investor community, wants to make Zambia’s mining sector the primary revenue stream for the country and the main driver of its economy. In addition, analysts predict a coming surge in mining investment in Zambia, which is one of the world’s largest copper producers.

HH has been working to attract investors to Zambia’s mining industry since he took office in August 2021 by introducing incentives such as a sliding royalty rate for mines, and is slowly managing to increase investors’ optimism in the potential of mining in the country.

Now, in a bid to continue to draw more investors as well as boost the Zambian economy, the president has set an ambitious target to raise Zambia’s copper production from 800,000 tons per year to three million tonnes per year within the next three years. This is despite the fact that some major copper mines, such as Konkola and Mopani, have yet to resume production.

How Zambia’s Administration is Turning the Mining Sector into the Primary Driver of the Economy

In spite of the challenges presented by dormant major mines and more, Zambia’s mining sector seems set to overcome the challenges in its way, as it appears on the brink of huge growth and foreign investment gain.

The Zambian mining industry seems to be attracting renewed interest from international mining companies as it has continued to announce a whole slew of new projects. In 2022, First Quantum Minerals unveiled $1.35 billion worth of new mining projects in Zambia. Meanwhile, Anglo American announced a return to full-scale copper exploration in Zambia through a joint-venture agreement with Arc Minerals, an Aim-listed mining and exploration company. California-based KoBold Metals is also raising $200 million to develop recently acquired copper reserves in Zambia.

These investments are a clear sign of confidence in President Hichilema’s administration and the potential of mining in the country.

The Zambian administration has also been taking other additional measures to attract further investment and projects, such as geological mapping, with the government mapping the remaining 45% of the country while updating the existing 55%, as a way to make it easier for miners to begin projects in the area.

Challenges and Changing Investors’ Perceptions

Hichilema’s administration has faced several challenges in boosting the mining sector since taking office. The legacy of the previous presidency included tenure insecurity for mining companies, high royalty rates, and withholding of VAT refunds.

Implementing the reforms HH has promised has proven slower and more challenging than anticipated. Negotiations for debt restructuring have been slow and drawn-out, licensing corruption is a persisting issue, the previous administration had disputes with mining companies like Konkola, and the country is suffering a power crisis.

Changing investor perception takes time. The fear of companies’ mining rights being revoked in the future also discourages some investors.

Stability in policy is crucial for Zambia’s mining sector to gain investors, and to create this needed stability, experts suggest fixing the ever-changing royalty rates as a first step.

Solutions hold hope for the future

Efforts are underway to resolve long-standing issues between the Zambian government and Konkola and Mopani by the end of 2023. Konkola is nearing an agreement between Vedanta and Zambia Consolidated Copper Mines, while Mopani is evaluating bids from potential buyers.

With these developments and the completion of Zambia’s mining mapping project, the country is well-positioned to attract new investment. Transparency measures, such as the public mining map, are positively impacting the region.

The surge in demand for copper further bolsters Zambia’s prospects in the global mining industry, and with more projects arriving, there’s sure to be a rise in employment rates and job opportunities for locals, diaspora, and foreign expatriates in the country.

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