2009 Investment Climate Statement - Zambia

2009 Investment Climate Statement
Bureau of Economic, Energy and Business Affairs
February 2009

Zambia has a generally positive investment climate, although progress toward a more open economy has been sporadic over recent years. During the 1990s, the Zambian Government (GRZ) opened its doors to foreign investment, reduced government intervention in commercial activities, privatized over 250 enterprises, and eliminated many market distortions. The impact of these progressive policies, however, was undermined by persistent fiscal deficits and widespread corruption at all levels of government. This led many Zambians to lose confidence in the efficacy of economic liberalization and caused the GRZ to seek alternatives in 2002 and 2003 to privatization of the national railroad as well as the national electricity and telecommunications utilities. Beginning in 2003, the GRZ increased dialog with the private sector and placed a new emphasis on attracting investment. However, the GRZ implemented a new mining tax regime in early 2008 thus abrogating elements of existing privatization agreements. With the late 2008 downturn in copper prices and production, the government initiated a policy to discourage job cuts in response to economic conditions.

Zambia experienced positive economic growth for the ninth consecutive year in 2008 with a GDP of USD 15.2 billion and a real growth rate of 5.8 percent (according to preliminary IMF estimates). The rate of inflation dropped from 30 percent in 2000 to single-digit inflation in 2007, due to prolonged fiscal discipline and monetary prudence, as well as adequate domestic food supply. However, rising food and fuel prices caused inflation to hit a year-on-year rate in December 2008 of over 16 percent.

With the privatization of Zambia's mines in 2000, the GRZ reversed an almost thirty-year downward trend in production and exports, resulting in renewed capital investments and increased exploration. Copper production rose to 535,000 metric tons in 2007, and a similar level is projected for 2008. In 2004, Vedanta Resources (Great Britain) replaced Anglo-American Corporation as the majority shareholder in Konkola Copper Mine. Other leading investors in Zambia's mining industry are Glencore International (Switzerland), First Quantum Minerals (Canada), Equinox Minerals (Canada and Australia), and Non-Ferrous China (NFC) Africa (China). This fresh capital investment is credited with increasing Zambia's copper production.

In April 2005, the International Monetary Fund (IMF) and the World Bank's International Development Association (IDA) provided Zambia significant debt service relief and debt forgiveness under the Heavily Indebted Poor Countries (HIPC) initiative. Zambia was the 17th country to reach the HIPC completion point and benefited from approximately USD 6 billion in debt relief. In July 2005, the G-8 agreed on a proposal to cancel 100 percent of outstanding debt to IMF, African Development Fund, and IDA for eligible HIPC countries. Zambia is among the beneficiaries of this additional multilateral debt relief. Zambia also completed a Poverty Reduction and Growth Facility (PRGF) arrangement with the IMF in September 2007. The executive Board of the IMF approved another three year PRGF arrangement for Zambia of about USD 79.2 million on June 4, 2008 in support of the country's economic policies aimed at alleviating poverty and sustaining growth.

Zambia implemented a USD 24.3 million its Millennium Challenge Account (MCA) Threshold Program from 2006 to 2008 that targeted three important areas, namely:

  • addressing administrative corruption by helping to streamline business processes at the Ministry of Lands, the Department of Immigration, and the Zambia Revenue Authority;
  • improving the environment for doing business in Zambia, by helping the newly-created Zambia Development Agency to simplify business registration, licensing, and inspection procedures, and to rationalize the economic regulatory framework, and by supporting Provincial offices of the Patent and Companies Registration Office (PACRO) to facilitate greater investment outside of the capital;
  • facilitating trade by helping to increase the efficiency of procedures at the borders through modernization of customs and border control.

As a result of the Threshold program, Zambia met its anti-corruption target and was determined in December 2008 by the Millennium Challenge Corporation to be Compact eligible.

Openness to Foreign Investment

The Zambian Government actively seeks foreign investment through the Zambia Development Agency (ZDA), which was established on January 1, 2007 by consolidating a number of trade and investment promotion entities to be a one-stop resource for international investors interested in Zambia. The ZDA board screens all investments for which incentives are requested and usually makes its decision within 30 days. The reviews appear routine and non-discriminatory, and applicants have the right to appeal investment board decisions.

In addition to complying with Companies Act No. 26 of 1994, a foreign company must, within 28 days of establishing operations in Zambia, provide the Registrar of Companies with a list of its directors, a copy of its constitution, and the name of its local representative.

There is no distinction in law between foreign and domestic investors. In the privatization process, foreigners are eligible to bid on state-owned companies. Foreigners may also invest in the Lusaka Stock Exchange without restriction and on comparable terms to Zambians. Companies seeking licenses or concessions or investors bidding for privatized companies are encouraged to commit to local participation. It is not clear how such commitments are weighed when decisions are made by the Zambia Development Agency.

A Citizens' Empowerment Act (CEA) passed into law in September 2006 aims to provide business opportunities to Zambian citizens. The Act is broadly worded and gives the GRZ latitude in defining the targets and beneficiaries of the Act. One of the first accomplishments of the Citizens Economic Empowerment Commission (CEEC) was the harmonization of a number of government empowerment funds in the Citizens Economic Empowerment Fund, designed to be a revolving loan fund to support entrepreneurialism.

The Zambian judicial system has mixed record in upholding the sanctity of contracts. The judicial process is lengthy and inefficient. Many magistrates lack experience in commercial matters. The GRZ established a Small Claims Court in 2008 to settle disputes involving less than USD 400. In 2004, the High Court established a commercial division to adjudicate high-value claims.

Conversion and Transfer Policies

Investors are free to repatriate capital investments, as well as dividends, management fees, interest, profit, technical fees, and royalties. Foreign nationals can also transfer/remit wages earned in Zambia without difficulty. There is no exchange control in Zambia for anyone doing business as either a resident or non-resident. Additionally, there are no restrictions on non-cash transactions.

Over-the-counter cash conversion of Kwacha into foreign currency is restricted to a USD 5,000 maximum per transaction for account holders and USD 1,000 for others.

Expropriation and Compensation

Investments may only be expropriated by an act of Parliament relating to the specific property expropriated. The law states compensation must be at a fair market value, although the method for determining fair market value is ill-defined. Compensation shall be convertible at the current exchange rate. In addition, investors are guaranteed that investments will not be adversely affected by any changes in the Investment Act for a period of seven years.

Land, which is held under 99-year leases, may revert to the government if it is ruled to be undeveloped. So far, no privately held land has reverted.

Dispute Settlement

There have been relatively few investment disputes involving U.S. companies since the Movement for Multi-party Democracy (MMD) government took office in 1991. The investment code stipulates that disputants must first resort to the Zambian High Court for internal dispute settlement. Failing that, the parties may go to international arbitration, which the state recognizes to be binding. Zambia is a member of the International Center for the Settlement of Investment Disputes (ICSID) and the United Nations Commission of International Trade Law (UNCITRAL).

Previous disputes involved delayed payments from state-owned enterprises for goods and services and the delayed deregistration of a U.S.-owned aircraft despite contractual obligations.

Disputes have arisen over issuance of game management area permits and awards of hunting concessions, and investors have complained that procedures in this sector lack transparency.

The courts in Zambia are reasonably independent, but contractual and property rights enforcement is weak, and final court decisions can take a long time.

There is no bankruptcy law in Zambia. Secured interests in property are possible and recognized but fairly rare. There is no system for recording these interests.

Performance Requirement and Incentives

Currently, there are no requirements for local content, equity, financing, employment, or technology transfers. The ZDA Act provides incentives for investments in rural enterprises, farming, and non-mineral exports (see below). Although performance requirements are not imposed, authorities expect commitments made in applications for investment licenses to be fulfilled. For example, the government requires that all international firms licensed to operate a cellular telephone network offer 10 percent of shareholding on the local stock exchange, per commitments made when entering the market.

General Incentives and Taxation: Foreign investors receive national treatment under the tax system. Income from farming is taxed at a rate of 15 percent, below the standard corporate tax rate of 35 percent. In addition, that portion of income that is determined by the Commissioner of Taxes to originate from the export of non-traditional products is taxed at a rate of 15 percent (traditional exports are all mineral exports of copper, cobalt, lead, zinc, gold, and silver).

Work Permit Requirements: Notwithstanding the provisions of the Immigration and Deportation Act, a foreign national who invests a minimum of USD 250,000 or equivalent in convertible currency and who employs a minimum of ten persons is entitled to a self employment license or resident permit. Investors operating in Zambia must obtain an investment permit (the ZDA provides assistance in obtaining this), in addition to other licenses/certificates, which may be required, depending on the sector (timber, tourism, and mining are some examples of sectors requiring special permits). With an approved investment license, an investor is eligible for up to five expatriate work/resident permits, but in practice companies have had difficulty securing these. Smaller-scale investors report additional difficulties in obtaining work permits.

Capital Allowances: Manufacturing, mining, and hotel structures qualify for a depreciation allowance of 5 percent per year, plus an initial allowance of 10 percent of the cost in the year in which the building was first used. Equipment, machinery, and plants used exclusively for farming, manufacturing, and tourism qualify for a depreciation allowance of 50 percent. Capital expenditures on farm improvements qualify for a farm improvement allowance of 20 percent per year for the first five years. Capital expenditure allowance on the growing of coffee, tea, bananas, citrus fruits, or similar plants qualifies for a development allowance of 10 percent per year through the first year of production. A farm work allowance of 100 percent applies to expenditure on farmland such as stumping, clearing, prevention of soil erosion, boreholes, wells, water conservation, and aerial or geographical surveys. The depreciation allowance for non-commercial vehicles is 20 percent (straight-line depreciation). Expenditure on other assets used in creating income qualifies for a depreciation allowance of 25 percent (straight-line depreciation).

Special Incentives: Investors in one of the five categories below are be entitled, in addition to the general incentives, to an exemption from customs duties and sales duties on all machinery and equipment (excluding motor vehicles) required for the establishment, rehabilitation, or expansion of that enterprise:
  • Exporters of non-traditional products that result in net foreign exchange earnings;
  • Producers of products for local agricultural use and the production of agricultural commodities or other agriculture-related products for export;
  • Businesses engaged in tourism resulting in foreign exchange earning in excess of 25 percent of the gross annual earnings of the business unit;
  • Businesses engaged in an import substitution industry using a significant proportion of local raw materials resulting in net foreign exchange savings;
  • Businesses located in a rural area.

Additional investment incentives for qualified investors include:
  • Suspension of customs duty for a period of five years on all machinery, fixtures and equipment, tools, and parts used in the assembly of motor vehicles, motorcycles and bicycles;
  • No customs duty on computer parts;
  • Suspension of customs duty for a period of five years on inputs used in the textile and clothing industry such as grey fabrics including loom stead, machinery, sewing threads, sewing machine spare parts and trimmings;
  • No customs duty on printed board-paper used in the packaging of Ultra High Temperature (UHT) milk;
  • Reduced excise duty on liquefied petroleum gas (LPG) from 30 percent to 15 percent;
  • Removal of customs duty for a period of five years on materials used in the manufacture and packaging of cement;
  • Removal of customs duty for a period of five years on imported materials used in the manufacture of roofing sheets and;
  • Removal of customs duty for a period of five years on machinery and equipment acquired by business enterprises that will operate in the Multi-Facility Economic Zone, in priority sector or rural enterprise.

The 2007 National Budget introduced several reforms and programs that would improve the business climate in Zambia and provide additional investment incentives. The reforms include two Multi-Facility Economic Zone (MFEZ) projects to diversify the economy and promote exports. The Japanese International Cooperation Agency hired a Malaysian company to develop a MFEZ in Lusaka, and the Chinese government is developing a zone in Chambishi in the Copperbelt. Businesses located in the MFEZs will enjoy special incentives, including duty free imports of raw materials, capital goods and machinery for five years. The GRZ established branch Patents and Companies Registration Offices (PACRO) Southern and Copperbelt provinces to improve customer service. On the other hand, the 2008 National Budget introduced a new fiscal mining tax regime, which unilaterally altered valid concession agreements. The new tax regime raised mineral royalty tax from 0.6 percent to 3 percent, corporate tax was raised to 30 percent, and windfall taxes were introduced to take effect when the price of copper surpasses certain thresholds. The windfall taxes were supported by the IMF, which believed the GRZ was not reaping sufficient benefit from the mining boom.

Right to Private Ownership and Establishment

There is a right to private ownership of business enterprises, and no business ventures are reserved solely for the government. In practice, however, the national telecommunications parastatal ZAMTEL maintains a monopoly on the international gateway, due to the high fee (USD 19 million) charged for an international gateway license, on "security" grounds. GRZ commitments to liberalize the gateway have not yet been realized. Private entities may freely establish and dispose of interests in business enterprises, but investment board approval is required to transfer an investment license for a given enterprise to a new owner. Private enterprises have occasionally complained that the playing field is not level when they compete with public enterprises for licenses or concessions.

A subsidiary of a foreign company is regarded as a Zambian company. The legal liability of the parent company is limited to the amount of capital invested in Zambia, together with any guarantees provided.

Protection of Property Rights

The ZDA Act assures investors that property rights shall be respected. No investment of any description can be expropriated unless Parliament has passed an act relating to the compulsory acquisition of that property. Also, in the case of expropriation, full compensation is made at fair market value and is convertible at the then current exchange rate.

The legal framework for trademark protection is adequate. There are fines for revealing business proprietary information, but fines are not large enough to penalize disclosure adequately. Copyright protection is limited and does not cover computer applications.

Zambia's patent laws conform to the requirements of the Paris Convention for the Protection of Industrial Property, to which Zambia is a signatory. It takes a minimum of four months to patent an item or process. Duplicative searches are not done, but patent awards may be appealed on grounds of infringement.

Zambia is a signatory to a number of international agreements on patents and intellectual property, including the World Intellectual Property Organization (WIPO), Paris Union, Bern Union, African Regional Industrial Property Organization (ARIPO), and the Universal Copyright Convention of UNESCO. National laws are generally adequate in protecting intellectual property rights, and there has been effective recent enforcement against pirated musical and video recordings, cosmetics, as well as software. Small-scale trademark infringement occurs for some packaged goods through copied or deceptive packaging. Embassy Lusaka co-hosted a two-day intellectual property workshop in November 2008 that underscored the economic costs of IPR infringement, sharing best practices, and discussing international legislation and enforcement standards. Following the workshop, Information Minister Ronnie Shikapwasha issued a directive to establish an interagency working group to update Zambia's IPR legislation and draft an IPR policy.

Enforcement of property rights is weak in Zambia, and courts have little experience with commercial litigation.

Transparency of Regulatory System

The government has made strides toward introducing transparent policies to foster competition, but complaints arise from time to time. Questions have arisen in recent years regarding the award of Game Management Areas, the enforceability of existing development agreements, and the fairness of competition between state-owned enterprises and private firms. In the agricultural sector, Zambian government interventions, through the purchase of maize (corn) at subsidized prices and the distribution of subsidized fertilizer, undercut the private sector's capacity to enter these markets. The unpredictability of import and export bans on commodities, especially maize, is a deterrent to private sector participation in commodity markets.

Labor laws provide for extremely generous severance pay, leave, and other benefits to workers, which can impede investment. Such rules do not apply to personnel hired on a short-term basis.

Although the Zambia Development Agency seeks to serve as a "one-stop shop" for investors, in practice red tape associated with licenses and permits presents problems. In some cases, scores of licenses are required to run a business. As mentioned in paragraph five, the government is working to streamline numerous licensing requirements and administrative procedures.

Proposed laws are usually not published in draft form for public comment.

Although the underpinnings for an efficient system to handle court disputes exist, Zambian courts are relatively inexperienced in the area of commercial litigation. This, coupled with the large number of pending commercial cases, keeps the regulatory system from being prompt and transparent. Some measures to promote resolution of disputes by mediation have been implemented in an attempt to clear the backlog. The courts support alternative dispute resolution, including a mechanism for binding arbitration. In 2004, the High Court established a commercial division to adjudicate high-value claims. This fee-based system has accelerated resolution of such cases.

Efficient Capital Markets and Portfolio Investment

Banking Sector

Government policy generally encourages the establishment of free market financial institutions. Banking supervision and regulation by the Bank of Zambia (BoZ), the central bank, has improved over the past few years. Improvements include revoking licenses of some insolvent banks, denying bailouts, limiting deposit protection, strengthening loan recovery efforts, and upgrading the training and incentives of bank supervisors. On October 1, 2007, the statutory reserve requirement was reduced to 8 percent from 14 percent, injecting additional liquidity into the banking system.

Although some improvements have been registered in recent years, credit to the private sector is expensive and readily available only for extremely low-risk investments. One factor inhibiting lending is a culture of tolerating loan default, which many borrowers view as a minor transgression. In addition, until recently, high returns on government securities encouraged commercial banks to invest heavily in government debt, to the exclusion of financing productive private sector investments. Banking officials readily acknowledge that they need to upgrade the risk assessment and credit management skills within their institutions in order to better serve private sector investors. Some financial institutions restrict credit to Zambian-registered companies, but foreign ownership does not disqualify a loan applicant. Banks provide credit denominated in foreign currency only for investments aimed at producing goods for export. Banks provide services on a fee-based model, which means that banking charges are generally high. Mortgage funding for housing is available from several leading Zambian banks, although interest rates are still very high.

Lusaka Stock Exchange

The Lusaka Stock Exchange (LuSE) opened in February 1994 and is structured to meet recommendations for clearing and settlement system design and operations. Since its inception, the LuSE has offered trading in equity securities, and in March 1998, the LuSE became the official market for selling government bonds. Investors intending to trade in a listed security or government bond are now mandated to trade via the LuSE. The market is regulated by the 1993 Securities Act and enforced by the Securities and Exchange Commission. The secondary trading of financial instruments in the market is very low or non-existent in some areas.

The number of listed companies increased to 21 in 2008. In 2008 telecom giant Zain Zambia Plc's (formerly Celtel) USD 133 million initial public offering generated greater than 300 percent excess demand. The successful IPO followed a period when market capitalization of the LuSE increased from USD 3.18 billion in 2006 to USD 4.82 billion in 2007, an increase of over 50 percent. The growth in market capitalization is attributed to the performance of stocks and the economy as a whole. The number of trades also increased by more than two-thirds during that period. Net foreign portfolio investment flows stood at USD 12 million in 2007, compared to USD 8 million in 2006. The second half of the 2008 has seen the stock market experience some turbulences. Rumors of President Mwanawasa's death in July caused movements at the LuSE, especially from international institution investors who were selling their shares in Zain. The turbulence continued through the death of the president, the change of government, and the worldwide stock market slumps to the end of the year.

There are no restrictions on foreign participation in the LuSE and foreigners may invest in stocks on the same terms as Zambians.

Political Violence

Zambia has no recent history of significant political violence. Infrequent student protests can sometimes turn violent. Presidential by-election in October 2008, following the death of President Levy Mwanawasa, was peaceful.


During the 1990s, corruption undermined the economic stability of Zambia. The problem pervaded Zambia, from the top down, ranging from senior government officials abusing the privatization process to local policemen committing extortion. The current and previous administrations have supported a campaign to uncover past abuses, punish perpetrators, and recover assets, with mixed results. Petty corruption remains common, as low salaries for government employees undermine efforts at reform, and extensive regulations create opportunities for bribes. The issuance of land titles has been singled out as a process particularly susceptible to corruption.

The Anti-Corruption Commission investigates allegations of misconduct. In 2002, the government formed a Task Force on Corruption to spearhead efforts to hold accountable high level officials from the previous administration. At former President Mwanawasa's urging, Parliament lifted former President Frederick Chiluba's immunity from prosecution, and he is among those charged with various offenses. In October 2006, the Task Force secured a conviction against former managing director of Zambia National Commercial Bank, Samuel Musonda, for 44 counts of abuse of office. Two other convictions were secured in 2007 against Dr. Kashiwa Bulaya, former permanent Secretary in the Ministry of Health, and former Zambia National Service Commandant Brig. Gen. Wilford Funjika, both for abuse of office. In 2008, former Zambia Privatization Agency Chairman Francis Kaunda was given a two-year jail sentence for abuse of office. The former Air Force Commander Lt. Gen. Christopher Singogo was given a six-year prison term for abuse of office in January 2009.

Zambia ratified the Southern African Development Community protocol against corruption in 2003. In 2007, Zambia became a party to the United Nations Convention against Corruption and ratified the African Union Convention on the Prevention and Combating of Corruption. These have not yet been put into force, and Zambia lacks adequate asset forfeiture, whistleblower protection, anti-money laundering, asset disclosure, evidence, plea bargaining, and freedom of information laws. Transparency International has an active Zambian chapter.

Bilateral Investment Agreements

Zambia has signed bilateral reciprocal promotional and protection of investment protocols with most of the Common Market for Eastern and Southern Africa (COMESA) and the Southern Africa Development Community (SADC) member states. In November 2001, COMESA signed a Trade and Investment Framework Agreement with the United States. On October 2, 2000, Zambia became a beneficiary of the African Growth and Opportunity Act (AGOA). Zambia has initialed market access offer through the Eastern and Southern Africa (ESA) interim Economic Partnership Agreement (IEPA) with the European Union on September 30, 2008. In completing these negotiations, the provisions of trade in goods chapter and related annexes of the ESA IEPA now apply to Zambia.

OPIC and Other Investment Insurance Programs

An OPIC/Zambia agreement was signed in June 1999. Zambia is also a signatory to the Multilateral Investment Guarantee Agency (MIGA), which guarantees foreign investment protection in cases of war, strife, disasters, other disturbances, or expropriation. In June 2001, the World Bank extended credit in the amount of USD 5 million for starting the African Trade Insurance Agency (ATI). This institution, which is open to all African states that are members of the African Union, provides exporters with insurance against receivables on export trade deals and political risk insurance for trade transactions.

The Embassy uses approximately USD 17.2 million in Zambian Kwacha per year. Kwacha are purchased at the market exchange rate, which ranged between Kw 4900 and Kw 3100 to the U.S. dollar over the course of 2008.


Although there is an abundance of unskilled labor in Zambia, investors complain that there is an inadequate supply of skilled and semi-skilled labor. The government adheres closely to ILO conventions. Labor-management relations vary by sector. Strikes are not uncommon in the public sector and often are related to the government's failure to pay salaries or allowances on time. The minimum monthly entitlement for any permanent employee including general workers is approximately Kw 600,000 (USD 125).

Foreign-Trade Zones/Free Ports

An investor may apply to be appointed and licensed by the Commissioner General to establish and operate a bonded factory under Section 65 of the Customs and Excise Act. The GRZ in early 2007 announced the creation of multi-facility economic zones (MFEZ) where foreign firms will enjoy a waiver on customs duty on imported equipment, excise duty and value added tax, among other concessions.

On October 31, 2000, the Common Market for Eastern and Southern Africa Free Trade Area (COMESA FTA) was launched. Zambia and eight other participating countries in the region are working toward a monetary union to reduce transaction costs and to make the region more competitive. COMESA FTA members intended to launch a customs union in December 2008, but missed the target date when the planned summit was postponed. In 2001, the Zambia Revenue Authority implemented a zero tariff for the COMESA FTA. There are 19 member states of which 13 belong to the FTA. The top five intra-COMESA exports from Zambia include tobacco, raw sugarcane, wire, refined copper and Portland cement.

Foreign Direct Investment Statistics

The ZDA compiles data on investment commitments from investors who obtain investment licenses at ZDA. Investors in mining projects do not invest through ZDA but instead work with the Ministry of Mines and Mineral Development. The ZDA data are therefore incomplete and do not show actual FDI flows or stocks and should not be considered a complete measure of investment. However, these are the only FDI data available in Zambia.

Investment Commitments by Sector (USD), as provided by the ZDA, (January to November 2007)

Sector 2007 (Jan to Nov) 2008 (Jan to Nov)
Real Estate18,100,00076,125,000
Chambishi MFEZ900,000,000-

(Note: Chambishi MFEZ is Chambishi Multi-Facility Economic Zone, a Chinese venture)

A total number of 217 projects were approved for investment license by the ZDA Board during the period January to November 2008. The total pledged investment is USD 9.5 billion, which is expected to create over 25,000 jobs for Zambians. From the total pledged investment, 93 percent or USD 8.8 billion is foreign direct investment.

Much of Zambia's foreign direct investment is in the mining sector, where 14 foreign companies have pledged to invest over USD 6 billion. The investment in mostly in new mining projects for copper and cobalt. U.S. companies are not among the large investors in copper, gold and gem mines. However, Allied Energy Corporation of Alabama in 2007 signed a Memorandum of Understanding to acquire a mine producing tin, tantalite, and mica, in Choma, Southern Province from an Australian company, Starfield Mine. The issuance of all prospecting, retention, and mining licenses is the responsibility of the Mines Development Department of the Ministry of Mines and Mineral Development. Data on mining investment is not readily available from official sources, but the following paragraphs describe some of the major investments, based on publicly available reports.

Konkola Copper Mines (KCM)

On March 31, 2000, South Africa's Anglo American Corporation (AAC) acquired the Konkola and Nchanga copper mines and the Nampundwe pyrite mine from Zambia Consolidated Copper Mines (ZCCM), through a new subsidiary called Konkola Copper Mines. In late January 2002, AAC informed the government that it would divest from KCM. AAC cited financial losses linked to declining world copper prices and its failure to secure funding for the Konkola Deep Mining Project, which was the main basis for its investment in Zambia.

Following an upturn in global copper prices, in August 2004 Vedanta Resources Plc, which has its principal operations in India and is based in Great Britain, acquired a 51 percent stake in KCM for USD 48.2 million. KCM announced that an estimated USD 400 million would be used to expand its smelter and improve underground operations. The improvements in KCM's production capacity will push underground ore production to six million tons per annum from the current levels of two million tons. The smelter plant was commissioned by mid 2008, but it has remained closed due to lack of materials to process in the plant. KCM is negotiating with Frontier mine in Congo DR, Chibuluma and Kansanshi over supply of feed to process at the new smelter which has an annual capacity of 300,000 tons. KCM is developing the Konkola Deep Mining Project, which will double total company production to 400,000 tons by 2009.

Mopani Copper Mine (MCM)

MCM started off as a joint venture between Glencore International (46 percent) of Switzerland and First Quantum (44 percent) of Canada, with Zambia Consolidated Copper Mines (ZCCM) holding the balance (10 percent). Glencore later assumed complete control of the operation by increasing its shareholding to 73.1 percent. The MCM Mufulira Deep and Nkana mines have been in operation since 1933 and 1932, respectively. Glencore has been rebuilding, upgrading and setting up new facilities in order to increase production. MCM spent USD 280 million on new projects in 2004 and another USD 205 million on capital expenditure in 2005 and planned a further USD 250 million on upgrades and new plants in 2006-2007. Some of the work includes a new primary smelting furnace, a matte-settling furnace, a sulfuric acid plant, an oxygen plant, and upgrades of the associated infrastructure. The expansion work should bring copper production capacity up to 380,000 tons. The Mufulira Copper smelter was expanded in a phased approach from a previous treatment capacity of 650,000 tons to 800,000 tons by the end of 2007. Mopani produced 135,000 tons of copper in 2005 and has not reached production targets that exceeded 200,000 tons in 2006 or 2007. Expansion work has continued despite of the drop in prices of copper on the international market.

Kansanshi Copper-Gold Mine

Kansanshi Copper Mine is located about 15 kilometers north of Solwezi, in the Northwestern Province of Zambia. First Quantum Minerals holds 80 percent of the project and Zambia Consolidated Copper Mines (ZCCM) holds the remaining 20 percent. During the commissioning stage (November 2004 to April 2005), Kansanshi production totaled 6,792 tons of copper in concentrates and 1,941 tons of finished copper cathodes. In 2006, production went up to 127,179 tons of copper, and 2007 production reached 163,824 tons. First Quantum has obtained a USD 120 million loan facility for the development of Kansanshi Mine, which will boost production. The mine undertook a third expansion of its treatment capacity in 2006. In light of the economic crunch, First Quantum has reviewed its investment and operations. The Bwana Mkubwa mine in Ndola shut down its copper processing plant and retrenched 365 workers. At Kansanshi, the company has modified its structures and re-deployed staff where necessary, retrenching about 70 workers.

Lumwana Copper Mine

Lumwana Mine is located in the North Western province, 220 kilometers northwest of the Copperbelt region. It is one of the largest undeveloped copper projects in the world, with a low-grade copper resource containing 901 million tons of 0.7 percent copper. Lumwana is 100 percent owned by First Equinox, of Canada and Australia. Equinox Minerals Limited signed a debt facility in December 2006 with a group of financial institutions to provide a total of USD 583.8 million for the completion of development and construction of the Lumwana copper project. The mine has employed 4,500 people. The town development activities are on course, with all main infrastructures progressing well and some 320 houses completed for occupancy. Initial production is forecast to be about 172,000 tons per year from mid 2009. The company has made significant progress on the establishment of a uranium plant at the mine and is hoping to be granted a license to mine uranium soon. Equinox has so far spent USD 500 million on the mine.


Zambia produces approximately 20 percent of the world's emeralds, and foreign investment has played a vital part in building up the industry. Kagem Mining Limited is the largest gemstone mining operation in Zambia, of which 75 percent is owned by the Israeli-Indian consortium known as Hagura and 25 percent by the Zambian government. In order to promote more foreign investment and mine development, Hagura Mining Limited awarded a management contract to Gemfields Resources Plc to manage and operate the Kagem Emerald Mine.

Gemfields Resources Plc

Gemfields Resources Plc is a gemstone mine development and gemstone prospecting company mainly focused on emeralds. The company currently owns five Zambian emerald mining licenses, including the Kamakanga, Pamodzi, Mbuva-Chibolele, and Arinus concessions. The company also holds prospecting licenses covering a substantial part of the prospective emerald-yielding areas in Ndola Rural Emerald Restricted Area (NRERA), together with a 50 percent interest in Kariba Minerals, which operates the largest Zambian amethyst mine. The quality of the Zambian emerald is almost at par with the Colombian emerald, with the most valuable emeralds currently sourced from the NRERA. During the fiscal year which end June 2007, Gemfields held two emerald sales from its Mbuva-Chibolele Mine. The company sold 992,997 carats of emeralds valued at USD 1.8 million.

Uranium Mining

Uranium deposits have been found in Southern, Lusaka, and Northwestern provinces of Zambia. The GRZ in consultation with the United Nations International Atomic Energy Agency (IAEA) formulated a policy to allow uranium mining in Zambia. Application for uranium mining licenses is now open to investors. Canadian-owned Equinox Limited has said that the Lumwana copper deposit contains 22 million pounds of U308 (8462 t U). African Energy Resources Limited, an Australian-owned mining outfit is drilling in Kariba on the southern border with Zimbabwe.

Albidon Limited

Australian Albidon Zambia Limited is constructing an underground nickel mine which produced its first concentrates in the third quarter of 2008. Albidon which is listed on London Stock Exchange has an initial life span of ten years and is due to cost about USD 100 million, including initial working capital costs. The annual nickel production is said to be 10,000 tons per year in nickel concentrates rising to 10,500 tons in subsequent years, 15,000 ounces of platinum group metals, 1400 tons of copper, and more than 400 tons of cobalt. Albidon has signed an agreement with Chinese state-owned Jianchuan Group Limited to buy the mine's output.

Kabwe Zinc Mine

Alberg Mining and Exploration of South Africa is scheduled to re-open the Kabwe zinc and lead mine, one of the oldest mines in Zambia which was shutdown in 1994 due to poor management and lack of capital. GRZ will retain 20 percent stake in the mine.

Chinese Investment

China has become the third largest investor in Zambia after South Africa and Great Britain. Foreign direct investment pledges reported by Chinese companies in 2006 amounted to about USD 300 million in 2006. China Non-Ferrous Metal Company's (CNMC) USD 150 million investment in NFC Africa Mining in Chambishi is China's largest copper mining investment. Copper production by Chinese-owned mines in Zambia is estimated at between 25,000 and 30,000 metric tons per annum. CNMC and another smaller Chinese copper firm signed a deal in 2006 to invest USD 220 million to build a 150,000-ton copper smelting plant, which became operational in 2008. Chinese-owned firm CBMI Construction has been contracted by France's Lafarge to construct a new USD 120 million cement plant in Lusaka, which was commissioned in November 2008. The new plant will produce 2,000 tons (80,000 50-kilogram bags) per day. China is setting up a USD 900 million Multi-Facility Economic Zone in Chambishi, Copperbelt, underwritten by the Chinese business community and Government. Zambia is the first African country to have a Chinese multi-facility economic zone. In early 2009, the Chinese government signed agreements to loan and grant Zambia a further USD 67 million as part of the zone and other projects.

Major U.S. investments

  • Cargill Cotton Ginners Limited: a wholly-owned subsidiary of Cargill of Minneapolis, Minnesota, an investment worth over USD 18 million.
  • Dunavant Cotton: a wholly-owned subsidiary of Dunavant Cotton of Tennessee, worth approximately USD 25 million.
  • National Milling Corporation: a wholly-owned subsidiary of Seaboard Corporation of Kansas, representing an initial investment of over USD 20 million.
  • Metal Fabricators of Zambia (ZAMEFA): a vertically integrated manufacturing company owned by Phelps Dodge International Corp, of Arizona, which was acquired in 2007 by Kentucky-based General Cable Corporation.
  • Lilayi Housing Estates: Nevada-based Houses for Africa, Pangaea Partners of Wisconsin, and Zambian partner City Investments Limited are together investing in a project to build 3,700 houses in southern Lusaka.