Zambia is set to establish investment company for 30% minimum stake from future mining projects
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Loading... - Simon Akello
- 19 Sep 2024
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Zambia is set to establish an investment company to secure at least a 30% stake in the production of critical minerals from future mining projects, as part of its broader strategy to capitalize on its rich deposits of essential metals. Mines Minister Paul Kabuswe announced the plan on Thursday, detailing how the country aims to maximize the economic benefits from its critical minerals, which are key to global energy transition technologies, such as batteries for clean energy.
As Africa's second-largest copper producer, Zambia is striving to increase its copper output more than fourfold by the early 2030s. In addition to copper, the country holds significant deposits of cobalt, graphite, and lithium—metals crucial for battery production and other clean energy applications.
The new initiative will see the creation of a special purpose vehicle (SPV) designed to invest in these critical minerals. This SPV will operate under a "production sharing mechanism," ensuring that the Zambian government holds a minimum 30% stake in output from new mining projects, as detailed in a framework document revealed in Lusaka.
Global mining companies such as Barrick Gold Corp., First Quantum Minerals Ltd., and China Nonferrous Mining Corp. are currently involved in Zambia’s copper sector, with ongoing investments. The government is also banking on increased output from mines like Konkola and Mopani, managed by Vedanta Resources Ltd. and Abu Dhabi’s International Resources Holding, respectively.
To meet its ambitious target of producing 3 million tons of copper annually by 2031, Zambia will need existing mines to double their output to approximately 1.4 million tons, according to the Ministry of Mines. New exploration projects, including KoBold Metals’ Mingomba initiative, backed by Bill Gates, are anticipated to contribute an additional 1.2 million tons per year.
The government’s plan includes mandating that at least 35% of procurement costs for critical mineral projects be allocated to local suppliers. Additionally, Zambia intends to revise its regulatory framework to curb the export of unprocessed minerals, promoting local value addition.
This announcement follows Zambia’s rejection of a license renewal request for the Kazhiba target at Midnight Sun Mining’s Solwezi copper project, without an official explanation. The rights have since been awarded to another company, prompting Midnight Sun to consider an appeal.
Zambia's investment strategy highlights the government's commitment to ensuring that the country's mineral wealth drives national development and benefits a wider segment of the population.
