Despite the perception that the Zambian mining industry is overregulated, the Chamber of Mines of Zambia (CMZ) reports that this is not the case and hopes to showcase as much at the inaugural Zambian International Mining and Energy Conference (Zimec).

Although the situation is not as dire as it is in Zimbabwe and the Democratic Republic of Congo, which exploration managers hold in extremely poor regard, the 2011 Fraser Institute Survey of Mining Companies ranks Zambia 57 out of 79 jurisdictions surveyed, according to the Policy Potential Index. This index serves as a report card to governments on how attractive their policies are from the point of view of an exploration manager. This is a steady decline from previous years where the country ranked as high as 34 in the same index.

However, CMZ president Nathan Chishimba reports that the view that Zambian mining industry is overregulated is unfounded.

From his perspective, the Zambian mining industry is not overregulated. “When rules are introduced, it is important that they support efficiency and promote transparency and the greater good of the industry and the country,” he says.

“As any football fan will tell you, it is not enjoyable to watch a match where the referee takes centre stage, and disrupts the freeflow of the match. So while it is important to have a referee to ensure everyone plays by the rules, it is best the referee applies rules in a manner that allows players to play well within the rules and give the fans a good experience,” says Chishimba.

He adds that this has proven difficult at times – hence, the perception of overregulation.

“Zambia has generally got good ground rules, but, in some cases, procedures have been introduced that are not supported by proper resourcing of the implementing insti- tutions and this has tended to make such rules an encumbrance. Having said this, I believe the country suffers from the general ‘broad-brush’ perception ascribed to developing countries.

“With the fresh perspective being provided by initiatives such as the recent credit rating and other positive economic reviews, I believe this perception will change markedly, and people will take a second look at the country’s regulatory credentials,” says Chishimba.

Favourable Policy Initiation
He points out that, on the legislative front, Zambia had one of the best mining codes enacted in 1995, and this was a key driver for most of the current foreign investors in Zambia.

In 2008, some fundamental changes were made to the mining code, primarily aimed at creating more opportunities for indigenous Zambians, and creating a level playing field for foreign firms and the Zambian government. Although the spirit and intent of these reforms were under- standable, appropriate and timely, the process of consultation and subsequent formula- tion of the legislative measures that were presented to Parliament were inadequate, resulting in several inconsistencies and omissions that were a potential dampener on future investment.

Unfortunately, in the same year, the global financial crisis hit the world economy, and some valuable ground was lost in Zambia’s march towards recovering the fortunes of the mining sector.

“In 2009, government made some adjustments to the tax code governing the mining sector, but the revised mining code, which government has been working on with indus- try, is still a work in progress. Much as this is the case, Zambia has adopted a more positive stance towards mining investment, especially over the last two years. This has improved the confidence of players in the industry. The Chamber believes this confidence will be greatly boosted if the required revision to the mining code is quickly implemented,” says Chishimba.

Government Initiatives
Chishimba points out that Zambia has traditionally been a mining country, resulting in considerable policy experience within the regulatory institutions.

“However, more needs to be done to move away from the mindset of formulating policy around the existing traditional Copperbelt region. There is a need to recognise that mining is a process that begins from expensive exploration, which often does not yield a successful deposit, to doing detailed feasibility and environmental studies, construction and then operation.

“This process is fraught with enormous risk, and industry needs a policy frame- work that adequately acknowledges this. Beyond this, the regulatory regime needs to adequately address issues of security of property rights and invest in appropriate regulatory tools to rigorously manage administration of mineral rights in a timely and efficient manner,” says Chishimba.

He points out that this will ensure a level playing field for all actors in the industry.

Bright Future Ahead
Chishimba reports that the future of mining in Zambia is bright.

“Zambia is rapidly emerging as a stable, attractive investment destination. Recent credit ratings have given Zambia a favourable verdict, and this will obviously provide a positive signal to those coming to Zambia. Additionally, the Zambian economy is post- ing steady growth, and all economic signals seem to be pointing in the right direction. With the current good commodity prices, this represents an exceptional environment in which mining companies can develop world-class assets in what is arguably one of the world’s premier mining provinces,” says Chishimba.

He adds that as long as Zambia can maintain the course, by having a predictable and favourable fiscal and regulatory regime, mining will thrive in Zambia in the foresee- able future, and for many years to come.

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