Ready to go: Zambia's mining sector has been kickstarted with a round of oil and gas licenses issued in July. Photos provided to China Daily
Country thirsty for investment to help it bring a wealth of untapped minerals to the surface
Editor's note: Underpinned by copper, cobalt and manganese, Zambia's mining sector is arguably the country's greatest asset.
On a mission to attract investment from all corners of the globe-but especially from long-term partner China - Zambia's dynamic Minister of Mines and Minerals Development Maxwell M. B. Mwale talks to In Focus about conditions for investors and possible openings.
In Focus (IF): Could you introduce us to the state of investment conditions within the mining sector in Zambia?
Minister Mwale (MM): The key to attracting investments in mining is security of tenure. Within our legal framework, investors in the mining sector enjoy that as long as they operate within Zambian law.
Associated with that, we provide incentives like 100 percent capital allowance, competitive mineral royalties (3 percent of gross value) and corporate taxes (at 30 percent.)
The issue is why someone should come to Zambia. When you look at the region, Zambia has enjoyed peace for a long time. No investor would take his money to a place where it will go up in flames.
There is also predictability within our government, in that there is consistencey: you come, you can operate, you will not find issues of seizure of property.
We firmly believe that property ownership spears development. Anyone who comes to invest in Zambia will not experience any negative government interference.
IF: How does the government plan to break away from its dependence on copper and subsequent price volatility?
MM: We have good infrastructure in place, in terms of power, road networks and human resources, which also attracts investment.
When we talk about the diversification of the mineral base production, historically we have been known for copper and cobalt, but we are host to good emeralds and we now recognize the presence of energy minerals, such as uranium and coal.
Uranium exploration activities commenced in the late 1970s and we recently issued two licenses in the southern part of Zambia.
There is also potential for uranium mining in the north eastern and north western areas of the country. We are seeing the development of uranium mining as a way of diversifying away from copper.
Aside from that, we have manganese in the Central and Rockola provinces.
As a government, we are trying to put systems in place that will exploit those deposits for the benefit of our people by collecting more mining taxes. Most of the manganese is being exported as raw manganese, with no value addition to it. We would like to see some smelters set up to treat the manganese.
The key to diversification of the minerals we produce is exploration.
Only 52 percent of our country is geologically mapped. Even with that percentage, we believe there is a need for greater follow-up work. The full potential of minerals production in this country has not been yet realized.
IF: What is the government planning to do in this area then?
MM: With technology, these issues are made simpler. Our idea as a government is to seek assistance to have aerial surveys done to detect anomalies of mineral deposits, which could be followed up with detailed geological data. If this happens, it would make things easier for investors, as we would have data packages available to pass on to them.
They could then focus on developing the mine rather than waste time and resources on geological work.
We have signed a memorandum of understanding with the Chinese Development Bank for $5 million. Through the Ministry of Land and Resources of China, we hope to undertake this work. Most investors are looking for packages. They don't want to start from the initial exploration stages.
IF: The discovery of oil and gas will open new avenues for Zambia. What is your vision on this?
MM: It is obviously desirable for us to become an oil and gas producing country. We did carry out some initial geological work, through prospecting for oil and gas and got positive results. We marketed a number of blocks and issued licenses in July.
North of our border, in Uganda, oil has been discovered. Also in the east with Tanzania, they have discovered gas.
We share the same geological formation with Uganda and Tanzania, so on that basis, we feel confident that we too should have oil and gas.
The only thing is that ours will be deeper, We also have coal and pockets of iron.
IF: Zambia has launched a series of bids for oil and gas exploration in the last few months. Could you comment on this experience?
MM: The response we had with our initial bidding round was encouraging. We attracted companies from Canada, the UK and the US.
With the next stage of exploration licenses, the bidding for the blocks will be extremely competitive. I can reveal that the first bidding was successful and we want to see it progress into exploration.
IF: Where do you see room for expansion in the mining sector for Chinese investments?
MM: The relationship between China and Africa is one of equal partnership. China has a huge market to cater to.
They have come to our rescue a few times. Chambishi Copper Mines, for example, was closed for 30 years and was not productive. Chinese investors just took it over and turned it around, after investing $100 million. They are producing copper now with impressive levels.
They did the same with the Rwansha Mine, providing stability for our government, turning it around and bringing development for the local areas.
China is a social partner. If the Rwansha mine had closed, people would have lost their jobs, they would have lost faith in the system and that would have been a recipe for instability.
We are in the process of establishing multi-facility zones. In these areas, we would like to see value addition of our copper and manganese.
Our people will have jobs that are related to these industries.
(China Daily 05/23/2011 page15)