Zambian Mining December 2024 Update

Delivering Key Insights and Opportunities in Zambia’s Mining Sector

Date : January 12, 2025

Prepared By :  SAVVY

1. Executive Summary

December 2024 marked a transformative period for Zambia’s mining sector, with significant investments, policy adjustments, and a heightened focus on sustainable energy solutions. Chinese companies continued to play a leading role, committing billions to expand Zambia’s mining output and diversify operations. As regulatory reforms take shape, the landscape presents both challenges and opportunities for stakeholders.

Key opportunities identified this month include greenfield investments in copper and gemstone mining, indirect opportunities for service providers in exploration, drilling, and equipment supplies, as well as strategic partnerships with Zambian and international stakeholders to facilitate new and ongoing projects. Advancements in infrastructure, such as hydropower expansion and road development, provide a foundation for growth. Stakeholders are encouraged to prioritize strategic collaborations, readiness for regulatory compliance, and sustainable investment practices to maximize benefits from Zambia’s evolving mining landscape.

2. Regulatory and Policy Updates

2024 National Budget and Its Impact on Mining

The 2024 National Budget, endorsed by the Zambia Chamber of Mines, was widely recognized for fostering stability and investor confidence within the mining sector. By maintaining a consistent tax regime and introducing targeted incentives, the budget aims to attract foreign direct investment while supporting domestic players.

Key initiatives outlined in the budget include:

Incentives for Exploration Projects: Tax breaks for companies engaging in large-scale mineral exploration, aimed at accelerating project timelines and improving resource identification.

Value Addition Support: Financial incentives for investments in mineral processing and beneficiation facilities to promote local value addition.

Infrastructure Development: Allocation of funds toward improving road and power infrastructure critical for mining operations in remote areas.

Mining Reforms and Strategic Objectives

The Zambian government has set an ambitious target of producing 3 million metric tonnes of copper annually by 2032, underscoring its commitment to revitalizing the mining sector. Central to achieving this goal is a high-resolution, countrywide geophysical survey planned for 2024, designed to:

Improve Resource Mapping: Provide detailed insights into Zambia’s mineral reserves to guide investment decisions.

Enhance Exploration Efforts: Reduce exploration risks and attract targeted investments by delivering reliable geological data.

Minerals Regulation Commission Bill (2024)

The proposed Minerals Regulation Commission Bill (2024) remains a critical area of focus for stakeholders:

Proponents highlight its role in improving governance and accountability in the mining sector through stricter oversight of licensing and compliance processes.

Critics express concerns about potential operational delays and increased costs, particularly for foreign investors navigating the new regulatory environment.

3. Trends and Developments

Major Investments and Partnerships

China Non-Ferrous Metals Mining Group (CNMC): Announced plans to invest $1.3 billion in Zambia over five years, spanning mining, education, science, and technology.

Chinese Mining Enterprises Association: Pledged $5 billion to increase copper production to 280,000 tonnes annually.

Sinomine Resources Group: Committed $563 million to the Kitumba Copper Mine, focusing on beneficiation and smelting.

Mercuria and IDC Joint Venture: Launched a metals trading unit to align with Zambia’s mineral revenue goals.

Infrastructure and Operational Developments

Shaft 28 Mine Investment: A $100 million project to revitalize the Shaft 28 Mine and integrate community development through irrigation for farmers.

Hydropower Expansion: Investments in the Northern Watershed to ensure sustainable energy supply for mining operations.

4. Investments and Opportunities

4.1 Support Services for Current and Future Mining Investments

Zambia’s expanding mining sector offers significant opportunities for companies providing ancillary services to support new and existing projects:

Exploration and Drilling Services: With increased investments in greenfield and brownfield projects, demand for specialized geological survey and drilling services is growing. Companies offering cost-effective, high-precision exploration solutions will find lucrative opportunities.

Equipment Supply and Maintenance: The need for advanced mining equipment is rising as large-scale projects ramp up. There is also a growing market for maintenance contracts and spare parts suppliers to ensure operational continuity.

Logistics and Transportation: Efficient transport solutions are critical for moving raw materials to ports and processing facilities. Opportunities exist in leveraging infrastructure projects such as the Lobito Corridor to optimize supply chain efficiency.

○ Example: Companies can explore partnerships with local transport firms to handle bulk shipments of copper and other minerals.

4.2 Greenfield Mining Projects

Zambia is actively seeking investors to develop greenfield projects, with key opportunities identified in critical minerals essential for the global energy transition:

Copper and Cobalt Mining:

○ The Mingomba Copper-Cobalt Mine, developed by KoBold Metals, is set to become a major producer by the early 2030s. This project demonstrates the potential for early-stage investment in Zambia’s rich reserves.

○ Specific Concessions: Over 40 mining permits are being prepared for investment partnerships under Zambia’s Industrial Development Corporation (IDC). These concessions cover untapped deposits of copper, cobalt, nickel, and lithium.

Nickel Mining: The Enterprise Nickel Project, backed by a $250 million investment, positions Zambia as Africa’s leading producer of nickel. This critical mineral is in high demand for battery production and renewable energy technologies.

Gold and Lithium Exploration: The Zambian government has prioritized exploration in regions such as North-Western Province, with incentives for investors in green energy supply chains.

4.3 Power Production Investments Targeted at Mining Firms

Energy reliability remains a core challenge for mining operations in Zambia, creating opportunities for investors in power generation:

Hydropower Projects: Investments in the Northern Watershed hydropower facilities aim to provide cost-effective, sustainable energy solutions for mining companies.

○ Example: Partnerships in these projects can secure long-term power purchase agreements with mining firms.

Private Power Generation: Several mining companies are exploring private energy production to mitigate grid instability. Investors in solar, wind, and hybrid energy solutions can capitalize on this growing trend.

Energy Storage Solutions: Opportunities exist in supporting the mining sector with battery storage facilities to manage peak demand and ensure energy reliability.

4.4 Investments Up and Down the Mining Value Chain

Zambia’s focus on local value addition and beneficiation aligns with its long-term economic goals, offering opportunities across the value chain:

Smelting and Refining Facilities: Establishing smelting and refining units for copper, cobalt, and nickel ensures greater value retention domestically while reducing reliance on overseas facilities.

Manufacturing of Mining Equipment: Local manufacturing facilities for machinery, tools, and spare parts can cater to Zambia’s growing mining sector while supporting industrialization.

Gemstone Cutting and Polishing: Zambia’s emerald and amethyst markets provide opportunities for downstream value addition. Investing in cutting and polishing centers can cater to the high-end gemstone market globally.

Mineral Trading Platforms: Joint ventures, such as the IDC-Mercuria metals trading unit, highlight the potential for developing centralized trading hubs in Zambia, streamlining the export process.

Future Outlook

Zambia’s mining sector is poised for long-term growth, driven by:

● Expanding opportunities in critical minerals like copper, cobalt, and nickel.

● Increased demand for local value addition facilities.

● Infrastructure developments enhancing logistics and energy supply.

5. Challenges and Risk Mitigation

5.1 International Competition

Intensifying competition from U.A.E., China, and U.S. initiatives.

5.2 Infrastructure Challenges

Balancing between the Belt and Road Initiative and the Lobito Corridor.

6. Actionable Insights

Engage in strategic partnerships and ESG integration.

Explore greenfield projects and align with evolving regulations.

7. Upcoming Events and Key Dates

Zambian Mining Indaba

February 12-14, 2025 , Lusaka, Zambia

• Policy updates and investment prospects.

Hydropower Project Briefing

March 5, 2025 ,Virtual Event

. Sustainable energy for mining