The government of Zambia, Africa’s second-largest copper producer, has approved the establishment of a new entity for investment and trading in minerals. The aim is for Zambia to earn more from its natural resources and move away from the traditional dividend payment model.
The Cabinet said the new Special Purpose Vehicle (SPV) will allow the country to adopt a “production-based sharing mechanism” to ensure the benefits from mineral resources accrue to the Zambian people beyond statutory obligations.
The new business model will enable the government to negotiate mineral prices and ensure the correct declaration of mineral consignments designated for export and domestic use. This is expected to help Zambia move away from the dividend payment model for mineral resources.
Currently, Zambia owns several mining assets through ZCCM Investment Holdings, which has interests in mines including those owned by Vedanta Resources and First Quantum Minerals. ZCCM recently sold a 51% stake in Mopani Copper Mines to a unit of the United Arab Emirates’ International Holding Company, retaining the remainder.
In February, Zambia’s mines minister, Paul Kabuswe, told Reuters the country planned to negotiate larger holdings in new mining projects as it seeks to raise its revenue and boost spending by investors on social projects.
Zambia, which produced 698,000 metric tons of copper in 2023, down from 763,000 metric tons the previous year, is targeting 3 million metric tons in annual output within the next decade as demand for the metal used in the electricity and construction industries rises.
The establishment of the new mineral investment and trading unit is part of Zambia’s efforts to maximize the benefits from its natural resources and ensure a fairer distribution of the wealth generated from the mining sector.