In last week’s column, we introduced the concept of energy transition and explored its potential impact on Zambia’s mining sector. Additionally, we emphasized how Zambia could strategically position itself to capitalize on the opportunities presented by clean energy technologies, which rely on a greater variety of minerals compared to those required for fossil-fuelled technologies. This week’s column will discuss key steps for Zambia to maximize the benefits of the energy transition. These measures include strengthening mineral resource governance, enhancing transparency and accountability mechanisms, building supportive infrastructure, and promoting value addition. Let’s delve into each of these policy recommendations in greater detail.
Enhancing mineral resource governance: Despite having established legal and policy frameworks, Zambia still faces certain gaps that require attention. A significant concern pertains to insufficient community engagement, especially those in mining areas, and inadequate mechanisms for equitable sharing of mining benefits, resulting in an uneven distribution of advantages. This challenge can be effectively addressed by actively promoting meaningful consultation with communities residing in mining areas, instituting frameworks that enable local participation in decision-making processes, and implementing benefit sharing mechanisms that guarantee fair allocation of mining benefits to communities.
In addition, we support the 2022 National Mineral Resources Development Policy, which takes a progressive approach to address important issues, including mining licensing. However, it is crucial to improve and streamline the licensing process by consolidating prerequisites, eliminating redundancies, and establishing clear decision-making timelines to minimize bureaucracy and enhance efficiency. Furthermore, regulatory institutions such as the Ministry of Mines, Zambia Revenue Authority, and Zambia Environmental Management Agency need to be equipped with adequate resources, technical expertise, and effective monitoring mechanisms. This will enable them to enforce regulations and ensure compliance within the sector and in so doing fostering responsible mining practices.
Promoting Transparency and Accountability: These key principles of a good mining sector involve granting public access to information, fostering fairness, and encouraging active participation of local communities in licensing, exploration, and revenue generation processes. In the spirit of accountability and transparency, for example, formalizing Artisanal and Small-scale miners necessitates rigorous background checks, conflict of interest controls, and robust environmental impact assessments to safeguard communities. Government must also enforce policies that require mining companies to disclose relevant information regarding their operations, including financial transactions, production volumes, and environmental impact assessments. This information should be made easily accessible to the public.
Infrastructure Development: Adequate infrastructure is crucial for the mining sector’s development. This calls for investing in energy infrastructure to ensure reliable electricity supply and upgrading transportation networks, including roads and railways to facilitate the movement of mining equipment and supplies. A good road network can attract investment, reduce logistical costs, and improve connectivity within the mining sector. For example, when Malaysia discovered oil in the early 1970s, the government prioritized funding infrastructure projects with its natural resource revenues, according to the Natural Resource Governance Institute. Over time, the Malaysian Government channeled large percentages of the country’s resource revenues to the construction of roads, bridges, and public transportation. These investments provided an operating environment that led to increased mineral production and also connected remote areas to the wider economy. Zambia could also learn from Sierra Leone, where all mining companies built their own power generating system and infrastructure without linking to the national electric grid.
Promoting Value Addition: In order to effectively uplift people from poverty and generate quality employment opportunities through the mining sector, it is imperative that we prioritize investment in value addition. Merely relying on the export of raw materials has proven insufficient in significantly reducing poverty levels. Therefore, it is high time we redirect our efforts towards investing in the process of adding value to our abundant mineral resources, capitalizing on the opportunities presented by the ongoing Energy Transition. This involves investing in downstream processing facilities to convert raw materials into finished or semi-finished products. Value addition not only increases the economic value of minerals but also reduces dependency on volatile commodity prices.
To conclude, Zambia’s mining sector has a wealth of untapped potential, waiting to be unleashed. With the winds of change blowing strong in the global energy landscape, the time is ripe for Zambia to seize the opportunities that the energy transition presents. By implementing measures outlined in this column, this vibrant nation can not only fortify its mining sector but also position itself at the forefront of inclusive development.
Elijah Mumba is a Lead Researcher on the extractives desk at the Centre for Trade Policy and Development (CTPD). He holds a Bachelor of Arts degree in Economics with Mathematics from the University of Zambia and a master’s degree in development economics from the University of Cape Town.