SESSION 3
ZAMBIA MINING INDUSTRY : A PRIVATE SECTOR PERSPECTIVE
– DEMOCRATIZING DEVELOPMENT THROUGH SHARED RESPONSIBILITY FOR SOUND
NATURAL RESOURCES MANAGEMENT
Dr Sixtus C. Mulenga
Founder & Executive Chairman
Musamu Resources Ltd
Zambia
Annual Democracy Forum 2014:
Fostering Democracy and Development Through
Sound Management of Natural Resources
Gaborone International Conventional Centre
Gaborone, Botswana
24 - 25 November 2014
Organised by the International IDEA and the Government of the
Republic of Botswana
PRESENTATION OUTLINE
1. Over view of the Zambia Mining Industry Development
2. Framework For Democratizing Development Through
Shared Responsibility For Sound Natural Resources
Management
3. Achievements and Challenges
4. Suggestions For The Way Forward
The Mining Industry in Zambia is over 100 years old, mining primarily;
copper, cobalt, lead, zinc, coal, manganese, industrial minerals and
gemstones (mainly emeralds and amethyst). The Industry has gone a full
circle of ownership:
 Pre – Independence Era -1890 to 1964 (74yrs)
Private Sector Ownership – Active participation mainly by
British Citizens
 Post Independence Era – 1964 to 2014 (50yrs)
 State Ownership – mainly state controlled.
27 years; 1973 to 2000.
 Private Sector Ownership – mainly free-market led and participation of both
local and foreign investors.
14 years to date; 2000 to 2014.
Framework For Democratizing Development Through Shared
Responsibility For Sound Natural Resources
Management - Zambia Mining Industry
 Political Stability – Zambia has been a haven of peace since independence;
 Multiparty Democracy – Zambia has changed Ruling Political Party Governments; three times
since independence; UNIP for 27 yrs, MMD for 20 yrs and PF current for 3 yrs;
 Good Governance and solid Legal Framework – Rule of Law;
 Investor –friendly Fiscal, Environmental and Legal Regime;
 Private sector driven economy;
 Extractive Industry Transparency Initiative – Zambia became an EITI Compliant Country in
2012 - the first country to become so in Central, Eastern and Southern Africa ;
 Mining Companies invest heavily in Corporate Social Responsibility (CSR);
 Investment in manpower development – most operations are manned by Zambians;
 Clarity in the roles played in the sector between government and mining companies; and
 Empowering of local citizenry in the ownership of mines either through Issuance of Mining
Permits, and buying of shares in listed companies on the Lusaka Stock Exchange.
ACHIEVEMENTS & CHALLENGES OF MINING INDUSTRY
KEY ACHIEVEMENTS INCLUDE:
 Having developed a world class mining industry and being one of




the top producers of copper , cobalt and Emeralds in the world;
Having developed a world class local manpower skill base;
Mining Industry being sustained as the major driver of Zambian
economy and base for economic diversification;
 Copperbelt Province – Traditional mining province
 Northwestern Province – New frontier
 Southern Province – New frontier
Mining Industry being the largest private sector employer in the
country;
Mining Industry Corporate Social Responsibility including;
Education, Health, Local Business Development, Community
Programmes and Sport & Recreation.
Copper production
Share of global production
Copper production
(Percentage.)
(Tonnes.)
16%
800,000
Zambia Coper Production
14%
700,000
Zambia percentage share of global copper
production
12%
600,000
10%
500,000
8%
400,000
6%
300,000
4%
200,000
2%
100,000
0%
0
1963
1967
1971
Private ownership
1975
1979
1983
1987
1991
1995
National ownership
1999
2003
2007
2011
Private ownership
Source: International Copper Study Group from 1996 onwards (Copper Bulletin March 2012 & April 2013; Yearbook 2006;
Statistical Yearbook 2008), US Geological Survey Annual Mineral Reports 1963-1995
Mining’s contribution to government tax revenues
Government revenue
(Kw million)
Source: Zambia Revenue Authority, 2014– includes revised data and latest 2013. This data is not in report
.
ZAMBIA EITI COUNCIL

A MULTISTAKEHOLDER GROUP COMPOSED OF EQUAL REPRESENTATION FROM THE
MINING INDUSTRY, GOVERNMENT AND CIVIL SOCIETY.

A TOTAL COUNCIL MEMBERSHIP OF 18.

CHAIRMAN SHIP = GOVERNMENT & VICE CHAIRMANSHIP = CIVIL SOCIETY.

FULL TIME EITI SECRETARIAT IN THE MINISTRY OF MINES.
MINING
COMPANIES
(6 Members)
GOVERNMENT
(6 MEMBERS)
CIVIL SOCIETY
ORGANISATIONS
(6 Members)
.
AN EITI PUBLIC BILLBOARD SHOWING AMOUNT OF TAX PAID
BY MINING COMPANIES TO GOVERNMENT
Overview: Macroeconomic contributions of mining
Typical share in
low and middle
income mineraldriven countries
Zambia
2012
Foreign Direct Investment
86%
>
60 – 90%
Exports
80%
>
30 – 60%
Government Revenue
>25%
>
3 – 20%
Gross Domestic Product
>10%
>
3 – 10%
Direct
Employment
1.7%
>
1%
Source: ICMM MPD Toolkit analysis
Key Challenges : Procurement of goods and services
Mining industry procurement
(2012 data extrapolated from sample, to represent total industry procurement; US$ million)
Imports
bought from
Zambian
companies
Zambian
produced
Direct
imports
Source: Four mining companies data and OPM calculations
Suggestions For The Way Forward

Encourage and nurture growth of local entrepreneurs in the Mining Industry so as to create a local
base of industrialists that can own mines and work side by side with international mining companies,
so as to create a firm base for growing and sustaining the mining industry;

Promote local manufacturing of inputs on the upstream side of the Mining Supply Chain and
downstream value addition, so as to expand local employment base, reduce unit cost of production
and maximise value derived from mineral resource endowment.

Governments and Private Sector should continue working together as partners in enhancing and
consolidating growth in the mining sector;

Governments to continue maintaining investor friendly policies necessary for attracting both Domestic
and Foreign Investment in the sector and Mining companies to ensure that they practice tenets of
good corporate citizenry;

Governments and mining companies to consolidate the framework that ensures that the benefits of
mining investment is visible and transformational in the local communities in which the mining
companies operate and in the national economy at large;

Mining companies to continue embracing best global practices in CSR and Community engagement
to ensure that there is meaningful and tangible development in the local areas they operate in and
have social licence to operate.

Governments to expand the EITI Framework to further embed Economic Democracy in the country.

Have clarity of roles played by both governments and mining companies in growing and sustaining the
mining industry to ensure achievement of sustained wealth creation for both the countries and the
shareholders.
THANK YOU
ALBIDON LIMITED |