About Zambia:
Zambia is a landlocked country in southern Africa with an area of 752,614 square kilometers, a population of 10 million people, and for 1999 (the latest year for which data were available) a per capita gross domestic product (GDP) of $880,1 based on 1999 purchasing power parity estimates. Overall, mining and quarrying accounted for about 5% of real GDP, 80% of merchandise exports, and about 38,500 jobs, or about 8% of total employment.
Government Legislation and Policies
The Investment Act of 1993 established the Zambia Investment Center as a one-stop support facility for investors and offers incentives to investors in the mining sector. The act, as amended in 1996, regulates, for example, investment incentives and investment guarantees. Investment is protected by the Securities Act (for the stock exchange) and the Investment Act against compulsory acquisition. No investment can be expropriated unless Parliament has passed an act that relates to the compulsory acquisition of that property. In the event of expropriation, the 1993 Investment Act, as amended, guarantees full compensation at market value and free transfer of the funds in the currency in which the investment was made.
In December 1994, the Government announced that it would no longer participate in exploration or become a shareholder in a mining company and would limit its functions to regulatory or promotional activities. The Companies Act (1994) has brought Zambia’s company law in line with modern British company law. The Mines and Minerals Act of 1995, which was passed by Parliament as 1995 Act No. 31 on September 13, 1995, is aimed at attracting risk capital, technology, and entrepreneurial efforts to the mining sector. The Mines and Minerals Act officially put in place a mineral policy that calls for a privatization program to encourage private development and diversification of the mining sector. The act commits the Government to promote small-scale mining; to development of gemstone mining and liberalization of gemstone marketing facilities; to diversification of mining through development of industrial, ferrous, and energy minerals; to reduction of ecological damage arising from mining; and to promotion of local value-added processing of Zambia’s mineral raw materials. The law covers all mineral commodities and treats large-scale, small-scale, and gemstone operations separately as to mineral rights (prospecting and mining authorizations).
Export of radioactive minerals, such as monazite, is illegal without special Ministerial approval. It also gives the Government leeway in negotiating individualized contracts with investors. Among other provisions were secure title to mining rights with provision to assign, the right to market products, international arbitration, exemption from import duties and sales taxes on material at least for an initial period of exploration and development, and royalty charges of 3% for large-scale mining license holders on the “net back value” of minerals free-onboard, less transport and smelting and refining costs. By 2000, privatization of most of the major mines had been completed, and efforts were ongoing to privatize the gemstone and other small mines sector and to attract foreign investors to develop other known metallic and industrial mineral resources.
DISC: hold OMC.
OMC
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