Zambia Advances New Mining Legislation to Mandate State Equity

Legislative Overhaul and State Participation. In a significant shift for Southern Africa's mining landscape, the Zambian government has advanced the Mineral Resources Development Bill of 2024. The legislation, discussed in parliamentary committees and cabinet during early July 2024, marks a pivot toward increased resource nationalism as the country seeks to leverage its copper and cobalt assets for economic recovery. The central pillar of the bill is a requirement for the state to hold a minimum of 10 percent carried interest in new large-scale mining licenses. This legislation is intended to replace the existing Mines and Minerals Development Act of 2015, which has governed the sector for nearly a decade. Under the proposed framework, any new applicant for a large-scale mining license must provide a mechanism for the state to acquire a 10 percent equity stake. Unlike previous arrangements where the state investment arm, ZCCM-IH, often bought into projects, the new bill emphasizes a carried interest model. This means the state's share is financed by the project's dividends rather than an upfront cash contribution by the government, effectively lowering the financial barrier for the state to enter new ventures while increasing the fiscal burden on private developers. ## Economic Recovery and Strategic Context. This policy shift comes at a critical juncture for Zambia. Having recently concluded a long-running debt restructuring process under the G20 Common Framework, the administration of President Hakainde Hichilema is under pressure to diversify revenue streams and deliver tangible economic benefits to the population. The government has set an ambitious target to increase annual copper production from approximately 700,000 tonnes to 3 million tonnes by 2031. Officials argue that mandatory equity ensures the Zambian people benefit directly from the extraction of finite resources, beyond just tax and royalty payments. The bill is also heavily influenced by the global race for critical minerals. As the United States and European Union seek to secure supply chains for electric vehicle (EV) batteries and green technology, Zambia has become a focal point of Western diplomatic and commercial efforts, most notably through the Lobito Corridor infrastructure project. By formalizing state participation now, Zambia is positioning itself to exert greater control over these strategic value chains and ensure long-term alignment between foreign investors and national development goals. ## Investor Concerns and Industry Response. While the government frames the bill as a means of ensuring win-win partnerships, the international mining community has expressed cautious concern. Industry bodies, including the Zambia Chamber of Mines, have noted that mandatory equity requirements can impact the Internal Rate of Return (IRR) for new projects, potentially deterring the very capital needed to reach the 3-million-tonne production target. Lenders may view the carried interest as an additional tax, which could complicate project financing for junior miners or exploration firms. However, supporters of the bill point to similar models in other jurisdictions, such as Tanzania, Ghana, and Indonesia, where state participation is standard practice. The success of this legislative overhaul will ultimately depend on the transparency of its implementation and the government's ability to maintain a stable, non-interfering regulatory environment for the operational aspects of mining. For Lycia Limited's clients, this development underscores the importance of deep local engagement and the need for robust financial modeling that accounts for equity dilution in Southern African jurisdictions.