Zambia, like Botswana and the Democratic Republic of Congo, is trying to implement a new economic playbook, selling its commodities directly to buyers.
Why is this important: The current revenue-sharing model, where mining rights are allocated to companies like First Quantum Minerals and Barrick Gold to operate the mines and sell refined copper products, is not beneficial to the government due to low revenue. The country now wants to control its natural resources and the monetisation opportunities to ensure better economic benefits through its proposed sell direct-to-buyers model while competing against other trading giants like Glencore Plc and Mercuria Energy Group Ltd.
- Zambia is Africa's second-biggest copper producer and aims to start its trading business with $100 million with a preference for physical metals instead of royalties.
- The country's refined copper export was $8.11 Billion in 2022, an increase from 2021's exports, with China being the highest export recipient, according to the United Nations COMTRADE database.
The bottom line: Zambia, like other mineral-rich African economies, is adopting a new model of playing an active commercial role in monetising its natural resources as it explores ways to generate revenue and grow the economy. With this new approach, the government needs a well-thought-out framework that ensures transparency while making it commercially viable for other mining companies to have an active role.