2023 Budget Aims to Boost Mining Investment
Last month, the New Dawn government outlined their plans to further boost investment in the Zambian mining industry.
A core element of the New Dawn government’s economic policy relies on boosting Foreign Direct Investment (FDI) into Zambia. This is expected to have the effect of boosting employment, realising the resource potential of the nation, and increasing growth across the Zambian economy.
President Hichilema at the recent China-Zambia Trade Investment Forum. Image via Twitter @HHichilema
Consequently, the most recent Budget, reduced the rate of tax payable on the transport of mining exploration rights. The rate, previously at 10%, now stands at 7.5% in a move designed to encourage further exploration activities by reducing the outgoing costs on a potential investor.
Further, the budget has restructured the mineral royalty rate to operate at incremental levels. The purpose of this is to mitigate the impact of price fluctuations and thus reduce the perceived risk of investment in mining.
These measures are designed to make the FDI climate more attractive in order to grow the economic potential of one of the country's greatest assets. The government is aiming to reach 1.5 million metric tonnes of copper production by 2023, increasing to 3 million tonnes by 2032. Such growth will require substantial foreign investment, but the outlook is optimistic.
The New Dawn government have already implemented selective measures to boost investment in the mining industry. The establishment of a Multi-Faculty Economic Zone (MFEZ) in Kalumbila will create tax benefits for mining suppliers and foster a hub of innovation that is expected to generate 10,000 jobs in 5-7 years.
Speaking in August, the Chief Executive of Barrick Gold noted; “At the moment the environment is very welcoming, driven by the new government.”
Kansanshi Copper-Gold mine already produces more copper than any other mine in Africa. First Quantum Minerals’ (FQM) further $1.35 billion dollar investment into the Kansanshi and Enterprise mines, agreed in May 2022, is set to boost the sector significantly. The Enterprise Nickel Project is set to be a top 10 nickel mining company globally.
Commenting on the investment, FQM emphasised that the government’s commitment to the predictability of the mining fiscal regime “provides the certainty needed to support large capital investments in Zambia.”
On top of promoting large scale investment, the New Dawn government is seeking to aid small-scale miners too. The government seeks to encourage mining cooperatives among artisanal and small-scale miners to facilitate access to support services and increase productivity. Measures to encourage formalisation will also be introduced to ease access to vital equipment and production-boosting training. Joint ventures between foreign investors and small-scale miners are also to be encouraged in order to increase access to affordable capital, a common growth inhibitor amongst informal and small-scale enterprises.
Image via Unsplash