Introduction

The mining sector continues to be the major economic sector driving the Zambian economy. Consistently, it has over the past decades provided in excess of over 70 percentage in foreign exchange earnings and been a major contributor to Zambia’s GDP at around 10-12 percent. This mineral dependent economy is unlikely to change in the near future given the huge mineral resource endowment of the country that includes highly sought after critical minerals required in transition energy technologies.

In an effort to improve the mining sector performance, the Zambian government has made several important pronouncements that require special budgetary allocations.

Key Government Initiatives Requiring Budgetary Support

i) The Three (3) million Copper Production Strategy: 2022 – 2031. The goal of this strategy is to increase copper production from the current average of about 800,000 tonnes to three million tonnes per year. To achieve this, a number of strategic objectives have to be undertaken requiring adequate funding estimated at K4.24 billion. Conducting the necessary countrywide high-resolution aerial geophysical surveys under this strategy was estimated to cost K3.9 billion. In the 2025 budget, a mere K364,000,000 was allocated.

ii) The Critical Minerals Strategy: 2024 – 2028: The Strategy aims to enhance linkages between the production of critical minerals and the local economy, enhance value addition, promotion of local content, increased industrialization and manufacturing and growing of revenue streams through the export of critical minerals and associated semi to finished products. Under this Strategy, geological mapping and Mineral Resource Development was estimated to cost K3.8 billion. With regard to funding research and development (R&D), there is a reduction in budgetary allocation from K 595,000 in 2024 to K 470,000 in 2025 budget. Without sufficient investment in exploration, skills development, and R&D, Zambia risks falling behind in the global race for critical minerals, which are essential to future energy technologies. This could not only undermine economic diversification but also negatively affect employment prospects in the mining sector

iii) Minerals Regulations Commission Bill 2024 (MRC): Although still undergoing review, MRC is meant to streamline and improve government services by overseeing and regulating mineral-related activities and ensure a more transparent and efficient management of mineral resources. MRC will effectively replace the Mines and Minerals Development Act of 2015. Critical functions of the Ministry of Mines and Minerals Development and mining sector performance depend on the quality of services provided by the Ministry and hence the need to quickly expedite its enactment for implementation within the 2025 budget cycle. The ongoing expansion in mining activities demands a well-funded Ministry. Only K25 million was allocated in the 2025 budget for the MRC.

iv) Creation of the Special Purpose Vehicle (SPV): In July 2024, Cabinet announced formation of SPV also called the “Zambia Minerals Investment Corporation” which will represent government’s interests in mining through joint ventures. The SPV is an important approach in securing the nation’s participation in exploitation of its mineral resources. No budgetary allocation was indicated for it in the 2025 budget.
Conclusion

It is evident that these are timely initiatives by the government that could push the Zambian economy towards its sustainable economic and social development goals. However, for this to be achieved, Zambia needs to be consistent in providing adequate budgetary allocations. A closer look at the 2025 budget, for instance, reveals serious underfunding in achieving these initiatives.

How can Zambia realistically achieve the target of producing 3 million metric tonnes of copper or meet the objectives of the Critical Minerals Strategy without sufficient investment in mineral exploration? Similarly, how can the country fully benefit from value addition and the promotion of local content if there is inadequate funding for skills development and research and development? Moreover, what are the consequences of poor funding on mineral revenue monitoring, particularly in preventing losses due to illegal mining activities and ensuring proper health, safety, and environmental management standards in the sector?

Addressing these questions is essential because the long-term success of Zambia’s mining sector depends on making the right investments today, ensuring that these initiatives are not just ambitious goals, but achievable milestones that can drive sustainable growth.

About the Author.

Dr. Stephen Kambani is a Research Associate at CTPD, with a PhD in Mineral Economics from Montana University (Austria); a Master of Engineering in Mineral Economics from McGill University, Canada and a Bachelor of Mineral Sciences from the University of Zambia