Zambia is poised to take greater control of its mineral wealth with the establishment of a new entity dedicated to investment and trading in the country’s resources.
The Cabinet approved the creation of a Special Purpose Vehicle (SPV) on Wednesday, marking a significant shift in Zambia’s approach to its natural resources sector.
The current model relies on dividend payments from mining companies, but the new SPV aims to move beyond that.
This entity will enable Zambia to participate in production-sharing agreements, ensuring a more direct stake in the value of its minerals.
The government hopes this strategy will translate into increased benefits for the Zambian people beyond just the obligatory taxes and fees collected from mining operations.
This new business model offers Zambia a two-pronged approach.
First, it allows the government to share in the physical resources extracted from the ground.
Second, it empowers Zambia to negotiate mineral prices and ensure accurate reporting of mineral exports and domestic consumption.
Zambia already holds minority stakes (between 10% and 20%) in several mines through its investment arm, ZCCM Investment Holdings.
However, the recent sale of a majority stake in Mopani Copper Mines highlights the government’s desire for a more prominent role.
Minister of Mines Paul Kabuswe previously indicated Zambia’s intention to secure larger holdings in future mining projects.
This move comes amidst Zambia’s ambitious plan to increase copper production.
The country, Africa’s second-largest copper producer, aims to triple its annual output to 3 million metric tons within the next decade.
Copper, a vital metal in the electricity and construction industries, is expected to see rising demand in the coming years.
By establishing the new SPV, Zambia seeks to capitalize on this growth and ensure it reaps a larger share of the profits generated from its valuable mineral resources.
