Outlook of the Investment Climate for Mining in Zambia

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Outlook of the Investment Climate for Mining in Zambia …

Outlook of the Investment Climate for Mining in Zambia
A PRESENTATION FOR THE ZAMBIA MINING ROUNDTABLE WORKSHOP
26th June 2013

Hosted by Hon Richard Musukwa, MP, Deputy Minister of Mines, Energy and Water Development, Zambia

Mining On Top: Africa - London Summit
25-26 Jun 2013 | London

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  • 1. A P R E S E N T A T I O N F O R T H E Z A M B I A M I N I N G R O U N D T A B L E W O R K S H O P 2 6 T H J U N E 2 0 1 3 OUTLOOK OF THE INVESTMENT CLIMATE FOR MINING IN ZAMBIA
  • 2. PRESENTATION LAYOUT  Introduction  Government’s Policy on mining  Legal framework for sector  Fiscal regime for the mining industry  Investment opportunities  Infrastructure to support the mining industry  Conclusion
  • 3. INTRODUCTION  Zambia is one of the growing economies in Southern Africa with vast investment opportunities in mining  Since commencement of commercial mining in the1930s, mining has been the engine of Zambia’s economic development  Minerals found in Zambia include base metals, gemstones, industrial and energy minerals. There are also indications of potential for oil and gas.  Mining has been dominated by copper and cobalt.  Control of mining has moved from private to state and private again
  • 4. 0 200000 400000 600000 800000 1000000 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 T O N N E S YEARS PRIVATE SECTOR STATE CONTROL PRIVATE SECTOR Performance of the mining sector 1960 - 2010
  • 5. GOVERNMENT POLICY FOR THE SECTOR  Realising the role private investment plays in the development of the industry, Zambia has since the 1990s, pursued a mining policy aimed at ensuring a conducive environment to encourage private investment in the exploration and exploitation of minerals.  Through this policy Government aims to ensure the development of a profitable and sustainable private sector driven mining industry.  In this setup, the role of Government remains that of ensuring an enabling environment . My Government is more than ever committed to providing an excellent investment climate to ensure continued growth of the industry.
  • 6. LEGAL FRAMEWORK FOR THE SECTOR  The principal legislation governing the mining industry is the Mines and Minerals Development Act No. 7 of 2008.  The guiding principle of the Act is Government’s commitment to the application of modern principles of transparency and accountability in the management of mineral resources.  The Act broadly deals with licensing and regulation of mining activities. The Act provided for establishment of the computerized mining rights cadastre system to ensure efficiency in the administration of mining rights.  The Act is under review to make it more responsive to developments in the industry.
  • 7. FISCAL REGIME FOR THE SECTOR  Fiscal regime for the mining in Zambia is still one the lowest in the region and includes the following: i. Corporate tax at 30 percent; ii. Variable tax of up to 15 percent on taxable income which is 8 percent of the gross income; iii. Mineral royalty at six percent on gross value on all minerals
  • 8. FISCAL REGIME FOR THE SECTOR iv. Capital allowance is at 25 percent per annum.
  • 9. INVESTMENT OPPORTUNITIES  Forty two percent of the country is geologically unmapped at the scale of 1:100,000. Investing in this area can lead to exploration opportunities for various minerals.  Tolling Facilities – smelters and refineries. Currently Zambia has only three major smelters and refineries with a capacity to produce 750000 tonnes per annum anode copper from 2.3 million tonnes of copper concentrates  With a projected increase in production to 1.1 million tonnes, a smelter is required in Zambia to treat a million tonnes of excess copper concentrates.  Precious metal plants for the treatment of refinery slimes  There is a possibility that Zambia could have oil. Exploration for oil and gas is another area where Government is calling for investment.
  • 10. Investment Potential in mapping •Investment opportunities exist in mapping and exploration to delineate resources Unmapped Area Mapped Area
  • 11. DEMARCATED OIL BLOCKS Reserved Block Reserved Block Reserved Blocks Reserved Block
  • 12. INFRASTRUCTURE TO SUPPORT MINING  Inadequate infrastructure (energy and transport) is one of the factors affecting development of the mining industry. To address this challenge the Government of Zambia undertaking a number projects.  With regard to energy, the through the power utility company Government is undertaking a number of projects to increase power generation capacity by 1500 megawatts by 2015.  To ensure an efficient transport system that would reduce cost of doing business in the mining industry, the Government is working on improving the current railway network and extending it to other rail lines.
  • 13. CONCLUSION  Zambia is stable investment destination offering vast investment opportunities ranging from exploration to value addition. To a serious investor Zambia is generally a low risk investment destination. Zambia is an Extractive Industries Transparency Initiative (EITI) compliant country, an indication that we are committed to ensuring accountability and transparency in the management of mineral resources. Accountability and transparency reduces risks in an investment environment.  The continued expansion of the mining industry in the past five years is an indication that the investment climate in Zambia has continued to improve.
  • 14. THANK YOU