The Zambian government is looking to establish its state mining company in the industry, as officials from the African country are seeking increased mining profits, The Wall Street Journal reported.
According to the news outlet, the government is looking to establish its own company, but is also looking to encourage foreign investment through the state-owned miner.
The election of Michael Sata as president of Africa’s top copper-mining nation has led the Zambian government to introduce a series of policies aimed at bolstering the country’s mining sector, which is expected to surpass 2 million metric tons of copper output in the next five years.
The Journal reported that the changes in Zambia may signify a change in mining trends for the continent. African countries are shifting toward resource nationalization in order to capitalize on positive commodity prices trends.
Countries including Zimbabwe, Guinea and South Africa are all considering legislation that is aimed at bringing specific projects within their borders under government control, but complete takeover is unlikely due to projected lack of investment by foreign companies.
“Our target is to ensure that ZCCM-IH (the state mining company) gets an active role in the mining sector, we want to break foreign dominance,” Minister of Mines and Natural Resources Wilber Simuusa said in a statement.
Despite the move by the government, the mining ministry is looking to support smaller mining companies in the country by increasing investment into their projects. According to the news source, this would help the minor firms with exploration projects and development of larger deposits.
Although the Zambian government is looking to gain more of a share of the existing copper mines in the country, increasing their holdings from 15 percent to 30 percent, only two projects have been targeted for complete acquisition.
“In the next two weeks we should be able to conclude talks toward the acquisition of the first green field project,” Simuusa said. This would also mean increased funding toward new projects located outside of the country’s Copperbelt province, according to the Journal.
The mining ministry noted that they would not interfere with any exploration projects launched by foreign miners, as they wish to encourage companies to look into finding new deposits throughout the country.
According to Reuters, the establishment of a more profitable nationalized mining company would help foreign investors, as the consolidation would help to create a more developed infrastructure and limit probability of new rules that would hurt expansion.
The Journal reported that Fredrick Bantubonse, director of Zambia’s Chamber of Mines, said that government stability and less regulation would boost foreign investment.
“A stable fiscal regime is what every investor yearns for and we believe this is being undermined,” the director said in a statement.
This increased interest in the mining sector has led to historic levels of production for miners in the country, as Zambia’s industry attained a record copper output of 820,000 tons in 2010, according to the news source.
Zambia is looking to double the production of its mining sector in the near future, as consolidation efforts are part of the government’s pledge to help its citizens capitalize on the resources of their nation.
“If we can double what we are getting, then we can say we have at least done something,” Simuusa said in a statement.
The United States Geological Survey reported that the mining sector in Zambia is expected to grow in other areas as well as copper, with an estimated increase in production for cobalt, nickel and sulfur in the coming years.
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