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Zambia’s presidency has decisively dismissed proposed new regulations that would have granted the state a minimum 15% stake in critical mineral mines without any financial compensation, thereby affirming its commitment to maintaining an investor-friendly environment. A draft “statutory instrument” originating from the mines ministry had stipulated that the government would be entitled to a “non-dilutable free-carried interest shareholding” in mines producing copper and other critical minerals, according to a recent report by Bloomberg News. The contentious instrument also included provisions that would allow the state to increase its stake to 40%, paid for not in cash, but through dividend forfeitures and tax concessions, the newswire added.
The rejection was made public by Jito Kayumba, President Hakainde Hichilema’s special assistant for finance and investment, who confirmed the executive’s stance last week in Johannesburg. “From the view of the presidency, it’s not something that will be brought to fruition, because we do not support it,” Kayumba stated, further clarifying that the “Government has no desire to take a free carry or any consideration, without there being any financial consideration.” This move effectively derails a proposal that had threatened approximately $10 billion in pledged mining investments, capital crucial for achieving the nation’s goal of significantly boosting copper production.
Implementation of the draft regulations would have directly contradicted President Hichilema’s high-profile efforts to position Zambia as a premier investment destination and would have undermined his administration’s ambitious objective to more than triple the country’s copper output. The proposed statutory instrument also sought to formally declare cobalt, nickel, and manganese as critical minerals, while simultaneously granting the state pre-emptive rights to purchase all output sold domestically. Following the presidency’s intervention, Hapenga Kabeta, permanent secretary at the mines ministry, sought to play down the free-carry provision, describing it as “merely ideas” while noting that engagements with both government and private sector stakeholders are ongoing as the ministry targets finalising the regulations by year-end.
President Hichilema, who took office in 2021, has made it a priority to unblock stalled projects and stabilise the mining sector after previous administrations frequently altered tax regimes and became embroiled in disputes with operators. The President’s move is seen as a strategic measure to reassure investors and secure long-term capital stability in the lead-up to general elections scheduled for next August.
