Value addition for minerals implies obtaining the highest possible value by enhancing the quality and quantity of the chain of production. In a nutshell, this entails increased local content and value of exported goods. Furthermore, value addition has the potential to reduce imports of finished goods. For instance, instead of exporting raw copper, Zambia could develop a robust manufacturing sector for electrical wiring and electronic components. Similarly, the country could establish local industries for cutting and polishing gemstones, which would significantly increase their market value. Attempts at increasing value addition by Zambian government are cited in both past (Mineral Policy 2013) and present (National Mineral Resources Development Policy 2022-2027) mineral policies. CTPD observes that such intentions in both policies have not gone far enough to address challenges of value addition in the mining sector. This is manifested by the mining sector’s lack of linkages with the rest of economy.

CTPD warns that this trend is expected to continue if proactive policy interventions are not implemented to address the situation. For example, recent pronouncements by government to set up a $6 million Mining Technology hub(MinTech 2024) in Zambia as part of efforts to enhance value addition ( and the isolated incidents of imported technology such as the announcement to import Electric Vehicle battery manufacturing equipment, if not guided by any policy, may not achieve government’s expectations on value addition. In the past, for example, Zambia used to assemble cars but unlike China, failed to use it as a springboard for its own locally grown motor industry. Other failed examples include the Zambia Emerald Industries (ZEIL) that used to cut and polish emeralds produced by Kagem and the Mansa Battery Limited. Clearly, the lack of policy direction may have led to these failures. The first part of this discussion examines critical issues affecting the successful evolution of mineral value addition activities in Zambia while the last part concludes by recommending some policy options requiring urgent attention if government is to achieve its value addition objectives for its minerals.

What are the critical issues?

Is it justified for Zambia to have a minerals value addition policy? Yes, the need for Zambia to adopt a robust minerals value addition policy is justified. As a significant producer and exporter of raw mineral commodities, Zambia’s potential for value addition is substantial. The country boasts a diverse array of mineral resources, including base metals such as copper, cobalt, manganese, and nickel; precious metals like gold and silver; a variety of gemstones including emerald, tourmaline, amethyst, aquamarine, garnets, and sugilite; energy minerals such as uranium and coal; and numerous industrial minerals like talc, limestone, and phosphates. Furthermore, a large youthful population and its strategic regional geographical position, presents Zambia with immense opportunities to enhance local content and increase the value of exported goods.

There are currently, however, a number of noticeable constraints to value addition in the country. These include:
• Absence of value addition policy – this probably underscores the main reason for underdevelopment of value addition activities in the sector. A policy must guide, promote, and monitor these activities.
• Reluctance of foreign investors to invest in value addition activities locally. For example, major mining copper/cobalt and gemstones mining companies, all export raw materials.
• Weak local industrial and technological base.
• Poor R&D facilities to harness existing and generate appropriate technologies.
• A serious disconnect exists between skills training institutions and industry requirements.
• Lack of access to affordable finance (especially among SMEs who otherwise could be key players in promoting value addition activities).

The need to transition towards value addition in the mining sector cannot be overemphasised. With this approach, Zambia will not only strengthen its manufacturing base but consequently, also reduce dependency on imports of finished products, such as jewellery and electrical appliances. However, achieving these objectives requires a well-defined policy framework to guide, promote, and monitor value addition activities in the mining sector.
In next week’s discussion, we shall conclude this topic by recommending some issues to be considered in the Value Addition Policy for the mining sector.

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 (Mining Engineering) from the University of Zambia.