Zambia enjoys a vast endowment of metals, gemstones, industrial minerals and potential energy resources including coal, hydrocarbons, and more recently, uranium. For several years now, Zambia’s economy has been greatly dependent on mining, particularly on copper, cobalt and zinc.
Globally, the country ranks seventh in the production of copper and second in cobalt. Copper and cobalt exports were valued at about US$4bn in 2006, and accounted for more than 70% of Zambia’s merchandise exports, according to the US Geological Survey (USGS).
Further, exploration of the Zambian Copperbelt area since the 1930s has led to the discovery of many other metalliferous and non-metalliferous resources. The Zambian state has adopted a mineral policy designed to augment investments in the mining sector and ensure its transition into a self-sustaining mineral-based industry.
As part of this, state-owned mining companies have been actively privatised since the year 2000 – particularly in the copper segment. As a result of these efforts, Zambia is widely rated a low-risk investment destination and has attracted high levels of foreign investment in recent times. The government recently concluded drafting a revised mineral empowerment policy that aims to stimulate greater participation of Zambian nationals in their vast mining industry.
The government also plans to develop large mining assets in all major provinces to create greater employment opportunities. This would address growing concerns about uneven distribution of mining wealth. Investments in Zambia’s mining industry for the year 2007 are expected to cross US$1bn – the highest in many years.
However, rising costs pose a serious threat to the performance of the Zambian mining industry. Low ore grades, high fuel and electricity costs as well as inadequate transport facilities have been major bottlenecks for the domestic mining industry.
Industry Forecast According to BMI, the mining industry of Zambia is forecast to grow 3.96% year-on-year (y-o-y) in 2008, contributing 12.75% to GDP. Over the 2008-2012 forecast period, the Zambian mining industry is likely to average annual growth at 6.9% to reach a value of US$3.36bn by 2012.
Source: Companies & Markets