A new analysis of mining over the past 100 years in Zambia shows a clear historical link between the levels of mining investment and wider economic development.
This is according to an academic paper published last month in the journal of the Southern African Institute of Mining and Metallurgy, entitled: ‘Copper Mining in Zambia – history and future’. The article was written by Jackson Sikamo, Alex Mwanza and Cade Mweemba.
The paper states that, when mining investment is sustained and significant, there is growth not just in the mining sector but also in the broader Zambian economy in terms of jobs, new businesses and the overall prosperity of the population. However, when mining investment declines, it is not just the mining sector that is affected but the entire economy, along with the “material wellbeing” of the population.
The paper identifies three major periods in Zambia’s history when the levels of investment in the mining industry had a pivotal effect on the fortunes of the country.
The first period was in the early 1920s, when mainly American and South African companies significantly invested in Zambia’s first commercial copper mines. Jobs were created, infrastructure was built, towns came into existence and support industries emerged.
“Thus, by 1964, when Zambia was born, it had a strong economy, driven by the mining sector,” the paper says, adding that Zambia at the time had one of the highest gross domestic product levels in Africa.
The second period was in the early 1970s, when government nationalised the Zambian mining industry and used its considerable revenues to drive an ambitious development programme. However, the paper highlights that, because it came at the expense of continued investment in mining, the industry was unable to expand.
Copper production and mining employment “plummeted”, and the economy went into decline. “The business prospects of the mines were bleak, and so were those for the national economy, which was heavily reliant on mining,” the paper says.
The third period was from about 2000 onwards, after privatisation. Investors “poured capital” into new machinery, new mining methods and new processing and extraction technologies. New mines were started in Zambia’s North-Western province.
“There was a sudden economic upturn, not only on the Copperbelt but in the country as a whole, with the mining industry a pivotal contributor,” the paper says. It states that this economic upturn occurred before the copper price started to recover, suggesting that it was the result of the investment itself, rather than an accident of commodity pricing.
By 2013, after more than $12-billion in investment, Zambia’s copper output had tripled to 763 000 t and direct industry employment had reached 90 000.
Looking to the future, the geology of Zambia shows “great potential for further investment in mining”, say the authors. Consequently, the country’s prosperity hinges on the creation of a stable mining policy, internationally competitive tax rates and an investor-friendly environment.