Mineral Resources and Production

Zambia is endowed with a wealth of mineral resources. The key minerals mined in Zambia include copper, cobalt, manganese, silver, iron, uranium, lead, zinc, coal, and gemstones such as emeralds, tourmaline, aquamarine, and amethyst. Copper remains the cornerstone of Zambia’s mining industry, forming the bulk of its mineral resources and accounting for the majority of the country’s export earnings.

To enhance copper production, Zambia has embarked on the National Three Million Metric Tonnes Copper Production Strategy, which aims to increase copper production from the current 800,000 metric tonnes to three million metric tonnes by 2032.

The Role of Mining in the Economy

The mining sector is the backbone of Zambia’s economy, accounting for over 70% of the country’s export earnings. It contributes significantly to government revenues through taxes, royalties, and employment opportunities.

Government Regulation

The mining industry in Zambia operates within a comprehensive regulatory framework, primarily governed by the Mines and Minerals Development Act No 11 of 2015 (the “Mines Act”). This legislation provides for the management and oversight of mining activities and the licensing of both small-scale and large-scale operations.

Regulatory oversight is administered by the Ministry of Mines and Minerals Development and the following departments which report to it:

• the Mining Cadastre Department;
• the Mines Safety Department;
• the Geological Survey Department;
• the Mines Department; and
• the Mining Licence Committee (the “MLC”).

Foreign Investment and Partnerships

Zambia’s mining sector is characterised by the coexistence of small-scale, artisanal miners and large-scale operations, with foreign investors predominantly driving the latter. International investors account for a significant portion of copper and cobalt production, contributing advanced technologies and significant capital investments.

Technological Advancements

The Zambian government has taken proactive steps to modernise and enhance the mining sector. In 2024, a high-resolution aerial geological survey was launched to attract targeted investments and accelerate mineral exploration. This initiative aims to provide accurate geological data, which is critical for ramping up copper production and exploring new mineral opportunities. The initial target areas for the survey include western and north-western provinces, covering districts such as Chavuma, Zambezi, Lukulu, and Kalabo. Preliminary geological data from these areas has already been obtained.

In the 2025 national budget, the government announced that it had increased the allocation for the aerial geological and geophysical mapping to ZMW364.0 million from ZMW160.0 million in 2024. It is hoped that the mapping exercise will help define the nation’s mineral resource endowment and attract investment.

Challenges and Risks

While the mining industry is vital to Zambia’s economy, it faces several challenges. These are:

• energy shortages in the mining sector;
• fluctuating commodity prices;
• unregulated artisanal and small-scale mining risks;
• unstable mining legislation and policies; and
• underdeveloped road infrastructure making transportation of minerals in and out of Zambia difficult.

Future Prospects and Development

Zambia’s mining industry has a promising future, with several growth opportunities on the horizon. The country has continued to attract investment in the mining sector. Zambia’s untapped mineral deposits, including rare earth elements and uranium, present significant investment opportunities. Ongoing and new exploration projects, supported by the government’s geological survey initiatives, are expected to uncover additional resources.

Meanwhile, anticipated improvements in mining policies, such as streamlined licensing processes aim to attract more investors and ensure sustainability.

Zambia operates a dual legal system, incorporating both statutory and customary law. The legal framework is based on the common law system, inherited from its colonial history.

Mining activities in Zambia are regulated by a combination of statutes, regulations, and environmental laws aimed at ensuring the sustainable and transparent management of mineral resources. The key statutes include the following.

The Mines Act

The Mines Act is the principal statute governing exploration, mining, and processing of minerals in Zambia. It establishes the Mining Appeals Tribunal for resolving disputes related to mining licences.

The Minerals Regulation Commission Act, 2024, which has recently been passed is poised to repeal the Mines Act.  However, the commencement order putting this new Act into effect is yet to be issued and so the Mines Act remains law.

Mines and Minerals (General) Regulations, Statutory Instrument No 7 of 2016

This covers processes such as applying for mining rights, transferring licences, and renewing mining permits.

Environmental Management Act No 12 of 2011 (EMA)

The EMA provides a framework for environmental conservation and sustainable resource use.

Environmental Impact Assessment Regulations, Statutory Instrument No 28 of 1997

This requires environmental impact assessments (EIAs) for proposed mining projects.

Ionising Radiation Protection Act No 16 of 2005

This governs the handling, storage, and use of radioactive materials, such as uranium, in mining activities.

All rights of ownership in, searching for, mining and disposing of minerals vest in the President. The President holds these rights on behalf of the Republic and the people of Zambia. The rights of landowners in Zambia do not extend to minerals, oils, or precious stones found on or beneath their land. Consequently, even if an individual holds title to land where minerals are discovered, ownership of those minerals remains vested in the President, acting on behalf of the people of Zambia.

Surface rights and mining rights are therefore separate under Zambian law.

The State adopts a hybrid role in the mining sector, functioning as both a grantor-regulator and an owner-operator.

Role of the State as Grantor-Regulator

The Mines Act establishes key offices responsible for the State’s regulatory functions in the mining sector through the Ministry of Mines and the:

• director of mines;
• director of mines safety;
• director of geological survey; and
• director of mining cadastre.

Additionally, the MLC plays a central role in managing mining rights. Through these offices and structures, the State:

• processes and issues applications for mining licences;
• verses the proper development of mines and ensures compliance with operational standards; and
• conducts geological mapping and exploration activities across Zambia.

Role of the State as Owner-Operator

The State also actively participates in mining operations through its investment vehicle, ZCCM Investments Holdings PLC (ZCCM-IH). ZCCM-IH originated from Zambia’s consolidation of mining assets in 1982, following earlier government nationalisations in 1968 and 1969. Initially formed to manage copper mining, ZCCM-IH now holds minority stakes in privatised mining companies and assets like energy and real estate, maintaining strategic influence over Zambia’s mining sector.

Additionally, Section 17 of the Mines Act grants the government the authority to acquire mining rights for purposes of government investment in designated areas. The Section outlines a framework allowing the government to reserve specific areas for investment by acquiring mining rights. These areas are protected from applications by private individuals or entities, ensuring exclusivity for government-led projects. Rights obtained under this provision are then allocated to government investment companies, ensuring compliance with relevant laws.

Article 16 of the Constitution of Zambia recognises the right to property. Specifically, Article 16(u) and (x) of the Constitution provide that property can, among other things, consist of any licence or permit. It also provides that it can be any mineral, mineral oil or natural gases or any rights accruing by virtue of any title or licence for the purpose of searching for or mining any mineral, mineral oil or natural gases.

Mineral rights do therefore have the status as property and they derive from law under Article 16 of the Constitution and the Mines Act. Mining rights are therefore protected under the Constitution and any person deprived of these rights may be able to challenge the deprivation as being unconstitutional.

In Zambia, the authority responsible for granting mineral rights operates at the national level. Applications for mining rights are received and processed by the Mining Cadastre Office (the “MCO”), established under Section 8 of the Mines Act. However, the consideration and decision-making on these applications are handled by the MLC, which is constituted under Section 6 of the Mines Act.

While the Mines Act envisions the establishment of regional mining cadastre offices to facilitate decentralised processing of mining applications, these offices have not been established as of 2024. Consequently, all applications are submitted directly to the MCO in Lusaka for initial processing before being forwarded to the MLC for approval.

Notably, there is no overlap of jurisdiction at the national or provincial level in the granting of mineral rights, as the process is centralised under the Mines Act.

In Zambia, the framework for security of tenure in the mining sector is established under the Mines Act. It provides a structured system for granting, maintaining, and enforcing mining rights, ensuring stability and predictability for investors while safeguarding national interests.

Validity of Mining and Other Licences

Exploration licence

An exploration licence is valid for an initial period of four years. On its expiry, it may be renewed for two further periods not exceeding three years each but the maximum period from initial grant of the licence will not exceed ten years. At each renewal, a holder of an exploration licence is required to relinquish at least 50% of the exploration area.

An application for renewal must be made six months before the expiry of the licence.

Mining licence

There are three types of mining licences: artisanal, small-scale and large-scale. Artisanal mining can only be undertaken by citizens.

The validity periods are:

• two years for artisanal mining;
• ten years for small-scale mining; and
• 25 years for large-scale mining.

Applications for renewal must be made three months before expiry for an artisanal mining licence, six months for a small-scale mining licence and one year for a large-scale mining licence.

Mineral processing licence

A mineral processing licence is valid for a period of 25 years and may be renewed for a similar period.

Gold panning certificate

A gold panning certificate is valid for a period of two years and is renewable for a further two years.

Mineral trading permit

A mineral trading permit is valid for a period of three years and is renewable.

Mineral import and mineral export permits

Mineral import and mineral export permits are valid for a period of one year and are limited to the quantities specified in the permit.

The Mines and Minerals Development (General Regulations), 2016 require that the director of the mining cadastre must inform the applicant where the MCL rejects the renewal of the licence. The notice of rejection must state the reasons/grounds for the rejection. If the applicant is aggrieved by the decision of the MCL, the Mines Act provides an appellate process to the Minister of Mines within 30 days of receipt of the rejection.

Conversion of an Exploration Licence to a Mining Licence – Rights

The Mines Act does not grant an automatic right to a holder of an exploration licence to convert it to a mining licence. A party that seeks to convert an exploration licence to a mining licence must meet the requirements under the Mines Act to apply for a mining right. These are as follows.

• There are sufficient deposits or resources of minerals to justify their commercial exploitation.
• The area of land over which the licence is sought does not exceed the area required to carry out the proposed programme for mining operations.
• The proposed programme of mining operations is adequate and compliant with the decision letter in respect of the environmental project brief or EIA approved by the Zambia Environmental Management Agency (ZEMA).
• Consent is required for the area under any written law, and the applicant must have submitted evidence of that consent.
• The standards of good mining practice and the applicant’s proposed programme for development, construction and mining operations in order to ensure the efficient and beneficial use of the mineral resources for the area over which the licence is sought must have been met.
• The applicant is not in breach of any condition of the exploration licence or any provision of the Mines Act.

In respect of large-scale mining some of the conditions are:

• that the applicant has the financial resources and technical competence and the financing plan is compatible with the programme of mining operations;
• that the applicant has undertaken to employ and train citizens and promote local business development;
• that the applicant’s feasibility study report is bankable; and
• that the applicant has submitted a capital investment forecast.

Maintenance Requirements

The mining rights established are granted subject to certain conditions. These differ depending on the mining rights. Generally, to maintain the mining licence, holders are required to:

• pay annual area charges;
• adhere to approved work programmes;
• submit various reports; and
• contribute to the Environmental Protection Fund, among others.

Cancellation Procedure

A mining licence can be suspended or revoked for various reasons. The Mines Act specifies these reasons under various provisions. The MCL can suspend or revoke a mining licence where:

• the licence was obtained by fraud or submission of false information;
• the holder contravenes the Mines Act, any other written law or any terms and conditions of the right;
• the holder fails to carry out mining operations in line with the approved plan of mining operations and the gross proceeds of sale of minerals from the mining area in any three successive years is less than half of the deemed turnover applicable to the mining licence in each of those years;
• the holder gives false information on the recovery of ores and mineral products, production costs or sale;
• the holder fails to pay annual area charges;
• the holder fails to pay mineral royalty;
• the holder fails to execute the approved exploration programme, in the case of a holder of an exploration licence;
• the holder has ceased to fulfil the eligibility requirements under the Mines Act; or
• the suspension or revocation is in the public interest.

However, before the MCL exercises this power, it must give written notice to the holder of the licence of the intention to suspend or revoke the licence. The MCL must also give reasons for the intended suspension or revocation and require the holder to show, within 60 days, why the licence should not be suspended or revoked.

The MCL cannot suspend or revoke a mining licence if the holder takes remedial measures to the satisfaction of the MCL.

Where a person is dissatisfied with the decision of the MCL, the Mines Act provides that the person can appeal to the Minister of Mines within 30 days.

Transferability

A mining right like any other property right is transferrable. Section 66 of the Mines Act entitles the holder to do so. However, this right is subject to approval from the Minister of Mines and payment of property transfer tax (PTT).

Similarly, Section 67 of the Mines Act further requires the consent of the Minister of Mines in order for a transfer of shares in a company holding a mining right to be effected. This consent is required for both direct and indirect transfers.

Protection of the Right to Property

The security of tenure of mining rights is also guaranteed under the Constitution. Mining rights being property are protected under Article 16 of the Constitution. This provision protects a holder from being deprived of property without compensation.

Legal Framework

The primary environmental law in Zambia is the Environmental Management Act No 12 of 2011 (the “Act”) read together with its amendments such as the Environmental Management (Amendment) Act, 2023. The Act provides for integrated environmental management and the protection and conservation of the environment and the sustainable management and use of natural resources. The Act further provides for:

• the preparation of environmental management strategies and other plans for environmental management and sustainable development; and
• the conduct of strategic environmental assessments of proposed policies, plans and programmes likely to have an impact on environmental management.

It also provides for the prevention and control of pollution and environmental degradation, public participation in environmental decision-making and access to environmental information amongst other things.

Other environmental laws and regulations in Zambia include the following.

• The Forest Act No 4 of 2015 which provides for the establishment and declaration of national forests, local, joint forest management areas, botanical reserves, private forests and community forests and overall sustainable forest management.
• The Environmental Protection and Pollution Control (Environmental Impact Assessment) Regulations (Statutory Instrument No 28 of 1997) (the “EIA Regulations”) which provide for essential procedures and requirements for compulsory project briefs and EIAs.
• The Environmental Management (Licensing Regulations) Regulations, 2013 which provide for air quality control. It sets procedures for waste management and deals with hazardous waste to the environment and other substances harmful to the environment such as pesticides and toxic substances and ozone-depleting substances.
• The Environmental Management (Strategic Environmental Assessment) Regulations, Statutory Instrument No 48 of 2021. It provides for the conducting of strategic environmental assessments.
• The Mines and Minerals (Environmental Protection Fund) Regulations, Statutory Instrument No 102 of 1998. These Regulations provide for the Environmental Protection Fund which provides assurance that a developer will execute an environmental impact statement (EIS).
• The Mines and Minerals (Environmental) (Exemption) (Amendment) Order, Statutory Instrument No 19 of 2000 as read together with the Mines and Minerals (Environmental) (Exemption) (Amendment) Order, Statutory Instrument No 19 of 2000. These Orders exempt Konkola Copper Mines Plc, ZCCM (Smelterco) Limited and Mopani Copper Mines Plc from the provisions of Statutory Instrument No 102 of 1998.
• The Mines Act which provides for environmental protection and pollution control, environmental information, public participation in environmental decision-making and the Environmental Protection Fund.

Environmental Licensing

The main features of the environmental licensing process for an exploration and mining project in Zambia are as follows.

ZEMA issues an approval authorising a person to conduct exploration or mining activities. A decision letter is granted by ZEMA after an EIA is conducted. The EIA evaluates the potential environmental and social impacts of the mining operations and suggests appropriate mitigation measures and the Act prohibits exploration, mining or mineral processing without an EIA.

The EIA is conducted by the Ministry of Mines and Minerals Development together with ZEMA. The application procedure for ZEMA approval is governed by the EIA Regulations.

EIAs in Zambia fall into two classes depending on the nature of the project. The first category is a project brief while the second is the EIS. Projects likely to have an adverse impact on the environment tend to fall under the EIS category.

There are serious challenges that ZEMA faces that affect its efficiency. Among the most critical challenges are inadequate funding and low staffing levels. During its interactions with stakeholders, the Committee was informed that because of a lack of funds and inadequate human resources, ZEMA failed to discharge most of its functions, which included, but were not limited to, environmental audits and monitoring of other activities of licensed facilities. ZEMA’s failure to undertake these activities means that facilities may be wantonly polluting the environment and, thereby, impinging on human health and the wellbeing of the environment.

Zambia has about 640 environmentally protected areas. These include national parks, game management areas, forests, fisheries management areas, private wildlife estate such as game ranches which are managed by the private sector and wetlands and wildlife reserves. The Lower Zambezi National Park and the Kavango-Zambezi Transfrontier Conservation Area are two of these environmentally protected areas. Furthermore, the Protected Places and Areas Act of 1960 allows the President to declare, by statutory order, an area to be a protected area. Section 52 of the Mines Act requires the consent of the appropriate authority for use of any land declared to be a forest or botanical reserve, a National Community Partnership Park, a Game Management Area or a bird sanctuary.

Protected areas affect exploration, development and mining in the sense that there are more considerations and oppositions regarding the impact the mining has.

If a mineral deposit is found within a protected area, the regulatory process mandates an EIA to evaluate potential environmental risks for mining to proceed. An environmental permit for mining in a protected area may have conditions attached that are more stringent. It is important to acknowledge that the current regulatory framework may not possess all-encompassing mechanisms required to comprehensively analyse and sufficiently address the possible environmental consequences in sensitive and highly valuable ecosystems.

Zambian laws do not have robust provisions and guidelines around mining and its contribution to the sustainable development of the communities in which mining companies operate.

However, Zambia mainly addresses the issue of community relations in mining projects through corporate social responsibility (CSR) frameworks. This is done through mining community development programmes. Section 4 of the Mines Act states that the development of local communities in areas surrounding the mining area based on prioritisation of community needs, health and safety is one of the general principles for mining and minerals development. Furthermore, Section 32 of the Mines Act provides that there will be attached to a mining licence as part of the conditions of the licence the programme of development, construction and mining operations as approved by the director of the mining cadastre and the undertaking for the promotion of local business development.

Additionally, community relations may be part of the conditions attached to a mining right when it is granted. For example, Section 35 of the Mines Act imposes an obligation for large-scale mining to implement the local business development undertaking attached to the mining licence.

Furthermore, Section 20 of the Mines Act provides for preference for Zambian products, contractors, and services and employment of citizens. This includes the promotion of local business development before beginning operations.

Prior and informed consultation on mining projects is mandatory. Stakeholder engagement is required as part of the EIS process under the EIA Regulations. There is a requirement for the developer to seek the view of the community which is likely to be affected by the project. The views sought are considered in the development of mitigation measures. Regulation 10(1) of the EIA Regulations is categorical and requires that the developer will, prior to the submission of the EIS to the Council, take all measures necessary to seek the views of the people in communities, which will be affected by the project.

This is a legal requirement carried out by the developer/investor.

Zambia does not have specially protected communities.

Community development agreements (CDAs) in Zambia are not robust and community development obligations are addressed through the use of business development undertakings which are attached to a mining licence.

Holders of mining rights have an obligation to develop the mining area which is the subject of a mining right. There is a further obligation to conduct mining operations in compliance with the mining right condition as well as the EIA and the programme of mining operations which is compliant with the decision letter issued.

Furthermore, the Mines Act require the holder of a large-scale mining licence to implement the local business development undertaking attached to the mining licence.

Zambian ESG guidelines are primarily focused on community development and environmental protection. Some of these are as follows.

Environmental

Environmental authorisation is carried out under the Act as read together with the EIA Regulations and other regulations. Under these, exploration, mining or mineral processing is prohibited without an EIA. Furthermore, an obligation is placed on the holder of a mining licence to develop the mining area, and carry on mining operations, with due diligence and in compliance with the programme of mining operations and the EIA.

Furthermore, Section 32 of the Mines Act provides that there will be attached to a mining licence as part of the conditions of the licence the developer’s undertaking for management of the environment in the mining area.

Social

Under social guidelines, holders of mining rights have an obligation under the Mines Act to develop the mining area which is subject to a mining right.

The Mines Act also obligates a holder of a large-scale mining licence to employ and train citizens of Zambia in line with the proposal for employment and training attached to the licence.

Furthermore, Section 4 of the Mines Act on general principles for mining and minerals development provides for development of local communities in areas surrounding the mining area based on prioritisation of community needs, health and safety.

Additionally, Section 20 of the Mines Act requires a holder of a mining right, in conduct of mining operations or mineral processing operations and in the purchase, construction, installation and decommission of facilities, to give preference to Zambian products, contractors and services as well as employment of Zambian citizens relevant qualifications or skills and conduct training programmes for the transfer of technical and managerial skills to Zambians.

Furthermore, attached to a mining licence as part of the conditions of the licence under the Mines Act is the developer’s undertaking for the employment and training of citizens and undertaking for the promotion of local business development.

An EIA also evaluates the potential social impacts of the mining operations and suggests appropriate mitigation measures.

Governance

There are no mandatory governance requirements specifically placed on mining companies. However, it is worth noting that the Mines Act disqualifies the holding of a mining right to a company which is in liquidation, forms part of a scheme for the reconstruction of the company or for its amalgamation with another company, is not incorporated under the Companies Act of 2017 or has not established a registered office in Zambia.

It also disqualifies a company whose directors or shareholders become an undischarged bankrupt or have been convicted within the previous five years of an offence involving fraud or dishonesty or an offence under other written law within or outside Zambia and sentenced to imprisonment without the option of a fine.

Illegal mining is a major issue in Zambia with the escalation of cases in recent years such as illegal gold mining in Kasempa district. It is highly disruptive to legal mineral production in the sense that it has led to deforestation, soil degradation and vast land damage or ruin due to evasion of environmental regulations. This affects other economic activities dependent on natural resources. Furthermore, government treasury and companies are deprived of what they would produce and earn because the illicit miners are producing and supplying through the back door thereby distorting the formal mining sector as the illegal mining competes with the formal mining sector.

Section 5 of the Mines Act provides that the director of mines safety is responsible for matters concerning the environment, public health and safety in exploration, mineral processing and mining operations. The Mines Safety Department has a Mining Unit that is responsible for carrying out inspections, mining safety audits and risk assessments. The Mines Act places an obligation on the holder of a mining licence to maintain security and ensure that there are no illegal miners at the licensee’s tenements under Section 35(1)(l). Furthermore, Section 111(1) of the Mines Act provides that a person who explores, retains a mineral deposit or mines otherwise than in line with the provisions of the Mines Act commits an offence.

The Section is not categorical on the criminal sanctions. However, Section 112 of the Mines Act states that a person who commits an offence under the Mines Act for which no penalty is provided is liable, upon conviction in the case of an individual, to a penalty not exceeding 500,000 penalty units or to imprisonment for a term not exceeding five years, or to both; or in the case of a body corporate or unincorporate body, to a penalty not exceeding one million penalty units.

Notably, the government has embarked on the formation of mining co-operatives to encourage illegal miners to legally contribute to the nation’s development though the payment of taxes.

Companies usually have recourse to court mechanisms when faced with illegal mining within their licence areas. Remedies sought are usually a declaration that certain operations and mining activities are illegal and an injunction to restrain illegal miners from interfering with the holder’s rights in respect of a licence as well as damages in respect of loss suffered by a holder of the licence.

A good example of environmental and community relations/consultations around mining projects in Zambia is environmental requirements to start mining. The conducting of an EIS is required by the Act as read together with the EIA Regulations as is the conducting of an EIA. Furthermore, Section 35(1) of the Mines Act, places an obligation on a holder of a mining licence to develop the mining area, and carry on mining operations, with due diligence and in compliance with the programme of mining operations and the EIA. Section 32(2) of the Mines Act provides that there will be attached to a mining licence as part of the conditions of the licence the applicant’s undertaking for management of the environment in the mining area.

A bad example of environmental and community relations/consultations around mining projects in Zambia is the lack of a clear path towards sustainability regarding the relationship between mining companies and their host communities. As stated in 2.3 Impact of Community Relations on Mining Projects, the policy framework in Zambia is vague regarding various important issues related to mining and its contribution to the sustainable development of the communities in which mining companies operate. For example, the case study of Kabwe Lead-Zinc Mine, Zambia conducted in 2021 highlighted the effects of the closure of the mine on the community. It revealed that communities in Zambia often sink into a state of abject poverty once a mine closes as all socio-economic activity opportunities disappear with the mine closure and this has replicated itself in various communities in mining towns in Zambia. This shows that the economic, social and environmental decline of the community in this context is mainly attributable to the lack of a socio-economic closure plan at the time of mine closure.

Zambia has undertaken several initiatives to address climate change and its impact on the mining industry. Zambia signed and ratified the Paris Agreement and the UN Framework Convention on Climate Change (the “UNFCCC”) on 21 September 2016 and 9 December 2016 respectively. The overall objective of the two agreements is to stabilise the greenhouse gas (GHG) emissions at a level that would prevent dangerous anthropogenic interference with the climate system and to strengthen the global response to the threat of climate change.

On 31 October 2024, the Green Economy and Climate Change Act No 18 of 2024 (the “Climate Change Act”) was introduced into the Zambian Parliament. The Climate Change Act seeks to, among other things, transpose the UNFCCC and the Paris Agreement into domestic law. The Climate Change Act also seeks to regulate carbon markets and provide environmental and social safeguards for climate change actions and establish a Climate Change Fund. Additionally, the Climate Change Act establishes the Green Economy and Climate Change Council, specifies GHG emission standards and establishes a greenhouse inventory management system. It also includes provisions on carbon stock management, registration of verifiers and enforcement provisions.

Furthermore, prior to the introduction of the Climate Change Act, the Zambian Cabinet approved the declaration of critical minerals such as copper, cobalt, lithium, amongst others as strategic minerals in 2023. Under this initiative, the government resolved to transition the country to a green economy. This led to an enhanced mobilisation of financial resources including in the public sector budget.

It is intended that the Climate Change Act will act as a mechanism for climate change adaptation and disaster risk reduction. Its main features are climate change adaptation and disaster risk reduction; climate change mitigation; low emission development; a green economy; and related actions.

Some of the salient provisions of the Climate Change Act are as follows.

• Section 10 of the Climate Change Act places a duty on the Minister of Green Economy and Environment to develop a National Adaptation Plan and a National Mitigation Plan, which will be reviewed every five years. This Section transposes Article 4(1)(b) of the UNFCCC, which deals with commitments of the parties, requires the parties to formulate, implement, publish and regularly update national programmes that contain measures to mitigate climate change and to facilitate adequate adaptation to climate change into domestic law.
• Section 4(2)(l) of the Climate Change Act, places responsibility for overseeing the revision and updating of the nationally determined contributions (NDCs) on the Department of Green Economy and Climate Change in the Ministry of Green Economy. This is similar to Article 4(2) of the Paris Agreement, which enables parties to determine the efforts that each of them will take to achieve the objectives of the agreement. These efforts are referred to NDCs and need to be prepared successively.
• Article 6(2) of the Paris Agreement introduced the concept of internationally transferrable mitigation outcomes (ITMOs), which have been described as a co-operative approach that allows countries to cut their GHG emissions by investing in projects that reduce GHG emissions in other countries. The Climate Change Act seeks to extend the domestication of the notion of ITMO to apply to projects other than those that come under the Forests Act and/or the Forests Carbon Stock Management Regulations.
• Under Article 7 of the UNFCCC, the parties agreed to adopt regular reports on the implementation of the UNFCCC and to publish these reports. This reporting requirement was enhanced under Article 13 of the Paris Agreement, which established an enhanced transparency framework. The Climate Change Act has provided mechanisms that allow for collection and storage of data related to climate change.
• Article 4(1)(g) of the UNFCCC requires the parties to promote and co-operate in scientific, technological, technical, socio-economic and other research related to the climate system intended to further the understanding and to reduce/eliminate the remaining uncertainties regarding climate change. Furthermore, Article 6(8) of the Paris Agreement recognises various approaches that can assist countries in the implementation of their NDCs, including finance, technology transfer and capacity building. Accordingly, Section 34 of the Climate Change Act establishes the Green Economy and Climate Change Fund and sets out some of the applications of the Fund.

Zambia has various sustainable development goals (SDGs) as the government of Zambia is committed to the implementation of the transformative 2030 Agenda for Sustainable Development. Some of the SDGs include the following.

• The Climate Change Act transposes various provisions of the UNFCCC and the Paris Agreement into domestic law and demonstrates Zambia’s commitment to taking effective climate action. The Climate Change Act has not yet been enacted into law. Once enacted, the Climate Change Act will serve as a significant piece of legislation in aligning Zambia’s legal framework with international obligations in respect of climate action.
• The government of Zambia has resolved to transition the country to a green economy. The National Green Growth Strategy 2024-2030 has been formulated to promote development pathways that lead to Zambia’s transition to a low-carbon, resource efficient, resilient and socially inclusive economy by 2030.
• The Zambia UN Sustainable Development Co-operation Framework (UNSDCF) presents the collective offer of the UN system to strengthen Zambia’s progress towards the SDGs and the implementation of its international legal obligations.

Zambia does not have legislative initiatives related to energy-transition minerals. However, Section 4(2)(l) of the Climate Change Act places responsibility for overseeing the revision and updating of the NDCs on the Department of Green Economy and Climate Change.

Furthermore, Zambia signed a memorandum of understanding (MoU) on a partnership on sustainable raw materials value chains with the EU represented by the European Commission on 26 October 2023. The MoU asserts that securing the supply of strategic and critical raw materials (CRMs) in a sustainable manner is an essential prerequisite for ensuring the green transition.

The availability of strategic and CRMs, such as copper, lithium, cobalt, manganese and natural graphite for batteries, or rare earth elements for permanent magnets for wind turbines, electric motors or computer data storage devices, represents an enabling factor for decarbonising energy production, connectivity, and mobility, while promoting green and digital economic transformation. It also provides for increased extraction and transformation of strategic and CRMs, as well as the development of related value chains, coupled with strong commitments to ESG standards, notably concerning transparency, traceability and the contribution to peace and stability in the region.

Another initiative is Zambia’s critical minerals strategy which was launched to harness Zambia’s critical mineral resources. The strategy aims to balance geopolitical interests with local impacts, ensuring that the benefits of mineral exploitation reach underserved communities.

Additionally, the government has set an objective to achieve the production of three million metric tonnes of copper by 2032 amongst other objectives in the extractive/mining industry.

The Mines Act requires holders of mining rights and licences to pay mineral royalty tax (MRT) as consideration for the extraction of minerals from Zambia.

Classification of Minerals

The Mines Act categorises minerals into five groups, with each being subject to distinct MRT rates. These are:

• base metals: non-precious metals, such as copper, iron, cobalt, and zinc;
• energy minerals: resources like coal and uranium, used for energy generation;
• gemstones: non-metallic minerals used in jewellery, such as emeralds, rubies, and amethysts;
• industrial minerals: minerals used in raw or processed forms, such as limestone, clay, and gypsum; and
• precious metals: high-value metals, including gold, platinum, and silver.

Calculation of MRT

MRT is calculated based on either the gross value or norm value of the minerals.

• Gross value: applies to industrial minerals, energy minerals, and gemstones, calculated as the realised price of the sale free on board (FOB) at the export point or point of delivery within Zambia.
• Norm value: used for base metals (eg, copper) and precious metals, calculated based on international market prices such as the London Metal Exchange (LME) or Fastmarkets MB average monthly prices.

Incremental MRT Rates for Copper

The incremental MRT rates for copper are as follows:

• 4% of norm value when the copper price is below USD4,000 per tonne;
• 6.5% for prices between USD4,000 and USD5,000 per tonne;
• 8.5% for prices between USD5,000 and USD7,000 per tonne; and
• 10% when the price exceeds USD7,000 per tonne.

Other MRT Rates by Mineral Type

Other MRT rates by mineral type are as follows:

• base metals (excluding copper, cobalt, vanadium): 5% of norm value;
• energy and industrial minerals: 5% of gross value;
• gemstones: 6% of gross value;
• precious metals: 6% of norm value; and
• cobalt and vanadium: 8% of norm value.

The Mines Act does not differentiate between national and foreign investors in terms of taxation.

Zambia provides a range of incentives aimed at attracting investment and supporting the mining sector. Key incentives include:

• guaranteed input tax claim for ten years on pre-production expenditure for mining, petroleum or gas exploration for registered suppliers in the sector;
• any mining company holding a mining licence carrying on the mining of base metals is taxed at 30%;
• dividends paid by a mining company holding a mining licence and carrying on mining operations is taxed at 0%;
• 25% mining deduction on capital expenditure on buildings, railway lines, equipment, shaft sinking or any similar works; and
• zero rating of capital equipment and machinery listed in the Second Schedule of the Value Added Tax Zero-Rating Order when supplied to a holder of a large-scale mining licence.

Stabilisation Agreements

The mining laws in Zambia do not expressly provide for stabilisation or development agreements. However, similar protections may be found under the Investment Trade and Business Development Act No 18 of 2022 (the “ITBD Act”). Under Section 6(2) of the ITBD Act, the Zambia Development Agency, with the approval of the Minister of Finance and the Attorney General, may enter into an investment protection and promotion agreement (IPPA) on behalf of the government with investors.

While IPPAs are not explicitly termed as “stabilisation agreements”, they can encompass provisions traditionally found in such agreements, such as:

• tax stability;
• protection against expropriation; and
• legislative and regulatory stability.

Under the Property Transfer Tax Act (the “PTT Act”), mining rights are explicitly classified as taxable property. The PTT Act defines property as including mining rights or interests granted under the Mines Act.

A mining right and an interest in a mining right can be transferred. A transfer of an interest in a mining right has been interpreted to include an indirect transfer of shares that granted a person beneficial interest in a mining right.

In order to transfer a mining right or an interest in a mining right, the holder or the right or interest must obtain the approval of the Minister of Mines and must pay PTT to the Zambia Revenue Authority at the following rates:

• 10% of the realised value in respect of a mining right for a mining licence;
• 8% of the realised value in respect of a mining right for an exploration licence;
• 10% of the realised value in respect of a mineral processing licence; and
• 8% of the realised value of the interest in a mining licence, which is classified as shares under the PTT Act.

The term realised value in respect of a mining right means the actual price of the mining right or as determined by the tax authority, whichever is higher. In respect of an interest in a mining right, the term realised value is the greater of:

• the proportion that the value of the company incorporated in the Republic bears to the value of the company whose shares are being transferred multiplied by the value of the transferred shares;
• the proportion that the value of the company incorporated in the Republic bears to the value of the company whose shares are being transferred multiplied by the consideration for the transferred shares; or
• the proportion that the value of the company incorporated in the Republic bears to the value of the company whose shares are being transferred multiplied by the nominal value of the transferred shares.

Transfers Through Corporate Structures Outside Zambia

The obligation to pay PTT applies irrespective of whether the transfer occurs directly within Zambia or indirectly through corporate structures outside the jurisdiction. In these cases, the transfer is still considered a disposition of property within Zambia if it involves mining rights or interest in mining (shares), and the tax liability arises as prescribed by the PTT Act.

The Supreme Court in the recent case of Teal Minerals Barbados Incorporated v the Zambia Revenue Authority, Appeal No 4 of 2022 dealt with a transaction in which Teal Minerals Barbados (Teal Minerals) entered into a share purchase agreement with EMR for the purchase of Teal Mineral’s shares in Konnoco, which held 80% of the share capital in Lubambe Zambia, a mining company in Zambia. The Supreme Court decided that an interest in a mining right may either be direct ie, legal or indirect ie, beneficial.

By virtue of Teal Mineral’s shareholding in Konnoco, which in turn held shares in Lubambe Zambia, Teal Minerals held an interest in Lubambe Zambia’s mining right. Therefore, Teal Minerals transferred its interest in the mining right held by Lubambe Zambia to EMR. The transaction was therefore subject to PTT. Indirect acquisitions of mining rights using offshore companies will therefore also require approval of the Minister of Mines and payment of PTT in Zambia.

Key Features of Attracting Investment in Zambia’s Mining Sector

Regulatory and legal framework

Zambia’s mining industry is governed by the Mines Act, which provides a robust legal framework ensuring security of tenure, transparent licensing procedures, and protection of investors’ rights. Efforts to streamline bureaucratic processes enhance the ease of doing business, making the sector more accessible to both local and foreign investors.

Rich geological potential

Zambia is endowed with extensive mineral resources, with copper as the primary export earner. Other significant reserves include cobalt, gold, emeralds, and other gemstones, alongside industrial minerals. Comprehensive geological data and surveys, accessible through government and private institutions, reduce exploration risk and attract investment.

Political stability

Zambia enjoys a reputation for political stability, peaceful transitions of power, and adherence to the rule of law. Investor protection is further bolstered by robust dispute resolution mechanisms, including arbitration.

Access to regional and international markets

Zambia’s membership in the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA) provides access to significant regional markets. Furthermore, favourable trade agreements facilitate the export of minerals to international markets, enhancing the profitability of mining projects.

Foreign exchange controls

No foreign exchange controls and dividends may be repatriated without the need for onerous regulatory consents.

Local content requirements

There are no local content requirements for holders of large-scale mining and exploration licences.

Zambia generally imposes minimal restrictions on foreign investment in mining. However, specific limitations exist under the Mines Act, particularly regarding certain mining rights and operations.

Size-Based Restrictions on Mining Rights

Mining rights over areas between two cadastre units (6.68 hectares) and 120 cadastre units (400.8 hectares) are reserved for:

• citizen-influenced companies: 5% to 25% equity owned by Zambian citizens;
• citizen-empowered companies: 25% to 50% equity owned by Zambian citizens; and
• citizen-owned companies: at least 75.1% equity owned by Zambian citizens.

Artisanal Mining

Only citizens or co-operatives wholly composed of Zambian citizens are permitted to undertake artisanal mining operations.

Small-Scale Mining

Small-scale mining is restricted to citizen-owned, citizen-influenced, or citizen-empowered companies.

Zambia is a signatory to various bilateral and multilateral treaties that promote and protect investments.

Bilateral Investment Treaties (BITs)

BITs are regulated by the Trade and Business Development Act. Zambia has entered into BITs with several countries to protect and encourage foreign investments. These treaties aim to create favourable conditions for investors by providing guarantees and protections against risks such as expropriation, unfair treatment, and restrictions on the transfer of profits.

Zambia has signed BITs with the UAE, Türkiye, Morocco, Mauritius, the UK, Finland, Italy, the Netherlands, France, Belgium, Ghana, Egypt, Cuba, China, Switzerland and Germany.

Of the 16 BITs, only those with the UAE, Mauritius, France, Germany, Switzerland, China, Türkiye, the Netherlands and Italy are currently in effect.

Multilateral Treaties

The African Growth and Opportunity Act (AGOA)

While the AGOA primarily focuses on enhancing trade between eligible African countries and the USA, it includes provisions that protect and promote foreign investments. These protections indirectly encourage US investments in Zambia’s mining sector.

SADC

As a member of the SADC, Zambia adheres to protocols on trade and investment, including the SADC Protocol on Finance and Investment. This Protocol aims to promote sustainable investment flows and ensure that investors are treated equitably, which applies to mining ventures and large-scale exploration projects.

COMESA

The COMESA fosters regional economic integration and provides a framework for investment protection similar to the SADC.

The COMESA Common Investment Area Agreement includes provisions that protect cross-border investments in member states, encouraging international mining companies to operate in Zambia.

The mining industry in Zambia relies on diverse financing mechanisms to support exploration, development, and operational activities. These include the following.

Equity Financing

Private equity funds play a significant role in financing mining projects, especially in their early stages.

Loans

Public and private loans include loans from commercial banks, development banks, or international financial institutions. However, it must be noted that in terms of the Banking and Financial Services Act No 7 of 2017, banks or financial institutions cannot, directly or indirectly (except as the Bank of Zambia may prescribe) grant a credit facility or guarantee a debt of a person or common enterprise so that the total value of the credit facility and guarantee, in respect of a person or common enterprise, is more than 25% of the regulatory capital of the bank or financial institution.

Shareholders may provide loans to mining companies, especially in closely held entities, to finance specific projects or operations.

Asset Financing

Mining companies leverage asset-backed financing to purchase expensive machinery and equipment. Lenders provide financing based on the collateral value of these assets, which are essential for operations.

Offtake Agreements

These are pre-arranged contracts where a buyer agrees to purchase a portion of the mine’s production in advance. Offtake agreements often come with upfront payments or financing to support project development. In Zambia, offtake agreements are particularly common for copper and cobalt, with major buyers securing long-term supply contracts to mitigate market risks.

The domestic securities market in Zambia, led by the Lusaka Securities Exchange (the “LuSE”), provides a regulated platform for raising capital. Despite its potential, the role of the LuSE in financing mining projects is minimal. This is primarily due to the low number of Zambian mining companies listed on the LuSE. Currently, the only mining-related entity listed is ZCCM-IH, which serves as the government’s investment arm in the mining sector. The limited participation of mining companies on the LuSE restricts the domestic market’s contribution to mining finance. It can be said that currently therefore the domestic securities markets plays little to no role in mining finance.

Similarly, the international securities markets play a minimal role in financing exploration, development, and mining activities in Zambia. Although mechanisms like depository receipts have been utilised to access foreign capital, their application is very rare. Depository receipts, which represent shares in a foreign company and are traded on international stock exchanges, can provide a pathway for Zambian companies to tap into global markets. However, their issuance typically involves significant compliance costs, regulatory hurdles, and the need for a robust corporate structure, making them an uncommon choice for most mining enterprises in Zambia.

Creation of Security Interests

Mining tenements

Security interests can be created over mining tenements under Section 66 of the Mines Act. A mining right holder may encumber their tenement, provided they obtain prior consent from the Minister of Mines. In practice, this takes the form of a lender to the licence holder taking a charge over the mining right or taking a charge over the shares of the licence holder. Where the licence holder is also the legal owner of the land over which the mining right exists, the licence holder may also create a mortgage over the land on which the mining right subsists.

On enforcement of the security created over the mining right or the licence holder, the lender can, among other powers of enforcement, take possession of the mining rights and resulting products, including residue deposits and mineral products.

Related assets

Security interests can also be created over movable property under the Movable Property (Security Interest) Act No 3 of 2016 (the “MPSI Act”). The MPSI Act allows for the creation of security interests in tangible and intangible movable assets, such as machinery, equipment, exploration data, or receivables, to secure the payment of a debt or the performance of an obligation. To establish a security interest:

• the secured creditor and debtor (eg, a mining company) must execute a security agreement detailing the terms of the security interest, the collateral, and the obligations secured; and
• the security interest is perfected by registering a financing statement in the collateral registry maintained under the MPSI Act.

Priority of security interests

A perfected security interest takes precedence over an unperfected one. Where two or more security interests are perfected, priority is determined by the chronological order of their creation and perfection.

Licence holders can also create fixed and floating charges over their mining assets. These charges must be registered.

Enforcement of security interests

In the event of debtor default, secured creditors have several enforcement rights, including the following.

• Repossession or disposal: creditors may seize or sell the encumbered mining tenements and related assets to recover their debts.
• The disputes arising from enforcement actions are resolved through legal processes in line with Zambian law.

The mining sector in Zambia is poised for significant growth over the next two years, both in terms of exploration and mineral production.

From a legislative perspective, it is anticipated that Zambia will have a new Act that regulates the mining sector. The new law is likely to place responsibility for the regulation of minerals in a separate entity. As a result, the Ministry of Mines will not be responsible for issuing and regulating mining licences issued under the new Act.

On the exploration front, activity is expected to surge, particularly in the western, northern, and north-western provinces, which remain largely underexplored. Advancements in technology, especially the integration of AI into exploration processes, have sparked renewed interest in these previously untapped regions. The focus will extend beyond traditional minerals like copper to include critical resources such as manganese, lithium, and cobalt, driven by rising global demand for these materials to support the green energy transition.

In terms of production, Zambia is set to increase its copper output from approximately 800,000 metric tonnes to over one million metric tonnes. This growth is attributed to the revitalisation of key mining assets such as Mopani Copper Mines, Kansanshi Copper Mines, and Luanshya 28 Mine, which were previously dormant but are now gearing up for operations. Additionally, major players like First Quantum Minerals (FQM) and Barrick Lumwana have made substantial investments to expand their copper production capacities.