Zambia to establish special purpose vehicle for mining investments and trading

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Zambia plans to create a special purpose vehicle to lead government investment and trading in the mining sector’s mineral resources, a government spokesperson announced Wednesday.

According to Cornelius Mweetwa, the chief government spokesperson, the decision was made during a Cabinet meeting on Monday last week.

“The Cabinet has determined the need to establish a special purpose vehicle for investment in the mining sector. This move aims to shift away from the dividend payment model for mineral resources to a production-based sharing mechanism, ensuring that the benefits extend to the people of Zambia beyond statutory obligations,” he said.

The new business model will facilitate the sharing of produced minerals and empower the government to negotiate mineral prices.

The Cabinet emphasized the importance of this new entity in ensuring accurate declarations of mineral consignments for both export and domestic use.

At present, the government holds mining interests through ZCCM Investment.

Mweetwa, who is also the Minister of Information and Media, stated that Zambia has traditionally used the dividend payment model for investing in mining assets.

He explained that the new business model would enable the actual sharing of produced minerals and allow the government to negotiate its own mineral prices.

Additionally, he mentioned that this approach will ensure revenue from mineral sales, accurate declarations of the mineral composition of consignments for export and domestic use, and the availability of raw materials for local companies involved in value addition.

ZCCM, which holds stakes in mines operated by companies like Vedanta Resources and First Quantum Minerals, recently completed a major transaction.

The company sold a 51% stake in Mopani Copper Mines to a subsidiary of the United Arab Emirates-based International Holding Company, retaining the remaining shares.

Earlier this year, Zambia’s Mines Minister, Paul Kabuswe said the government aims to secure larger stakes in upcoming mining projects. This strategy is intended to boost state revenue and encourage investors to contribute more to social initiatives.

In 2023, Zambia’s copper production was 698,000 tonnes, down from 763,000 tonnes the previous year.

However, the country has set an ambitious goal of reaching an annual copper output of three million tonnes within the next decade, driven by anticipated growth in demand from the electricity and construction sectors.

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