Appreciating Challenges
The Zambian mining industry has continued to operate as enclaves in the economy. However, prior to privatisation, mining appeared to fulfil some of its social and economic expectations of the country and especially in communities where they operated. Quality social amenities such schools, sports facilities, housing, water, sanitation and health facilities, were available. These facilities began to disappear and left in state of disrepair following the privatisation.
Despite its long history as a major global producer of copper, cobalt, and emeralds, Zambia continues to export these raw materials without significant value addition. Quite clearly, the country is at the bottom of the value chain ladder. Therefore, what new strategies can Zambia adopt to capture benefits from the rising demand of critical minerals?
Proposals to be Considered in the Critical Minerals Strategy
Benefit sharing
• Strategy must ensure tax regimes remain stable and not grant incentives that do not adequately compensate for the loss of non-renewable resources.
• Due to the weak current technological base and R&D capabilities respectively, Zambia is not in a position to rip the enormous benefits of value chain in critical minerals. The strategy must promote R&D, technology transfer and skills development.
• Exploitation of critical minerals must support local participation at all levels in the value chain.
• According to observations by CTPD, local communities among other things advocate for clearly defined royalty payment systems and agreed upon monitored Corporate Social Responsibility (CSR) programs.
Financing options
• The current mining policy direction supports a private sector driven economy. CTPD recognizes the importance of FDI and the benefits that come with it. Country must strive to acquire equity to maximize benefits and provide sector oversight.
• Recent revocation of more than 2,000 non-performing licences due to lack of funding raised serious concerns by CTPD. The artisanal and small-scale miners will require special financing options that come with other forms of assistance.
Improved Regulatory Framework
• The newly created Minerals Regulations Commission must be capacitated to fulfil its oversight mandate.
• Licences must be granted to technically and financially capable investors. All none performing Licences must be revoked to unlock investment in the sector.
Mitigation of Expected Increase in Illegal Mining Activities
• The government must improve efforts to curb expected rise in illegal mining by formalization and provision of technical and financial services.
Environmental Degradation and Social Conflicts
• Enhance environmental management. Increased demand of critical minerals will result in escalation of environmental degradation. Large-scale land-based investments will invariably lead to significant displacement of people thereby denying them of livelihoods, access to water, pollution and cultural invasion through migrations of people from other regions.
• Where displacement of people is done, adequate compensation overseen by concerned authorities must be done.
• Strategy must deal with concerns raised by various chiefs with regard to numerous mining licences being issued by Ministry of Mines and Mineral Development (MMMD) with little consultation.
• Caution must be exercised when granting licences especially in ecologically sensitive areas.
• Role of chiefs will need strengthening in fighting against illegal activities and maintenance of amicable social licence to operate by investors.
Improving Geological Data Base of Critical Minerals
• Government must carry out and complete planned geological mapping of the country for effective investment promotion.
Conclusions
A proposed strategy for critical minerals in Zambia must be seen to address the social, economic and environmental concerns and fully geared to spur sustainable development. CTPD is of a view that the submitted proposals, will assist in the formulation of a result-oriented strategy. It is further observed that since Zambia is now a leading producer of emeralds, government must seriously consider this as a “critical mineral” and develop a strategy for its contribution towards sustainable development unlike is the current case.
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
