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If the Minerals Regulatory Commission Act is not amended, Zambia will return to a long period of policy instability and stagnant mining investment.
If the Mineral Regulatory Commission Bill is passed into law in its current form, the signal to the local and global mining investment community will be clear: Zambia has neither policy stability nor the task of expropriating mining investors’ assets. This will increase the perception of investment risk in Zambia, thereby raising the cost of capital for every business in the country, and will deal a fatal blow to the government’s ambitious strategy to increase copper production to 3 million tonnes.
Our members believe that with just a few key changes to specific sections, the impact of the bill could be very different. The law as currently drafted could either discourage mining investment or stimulate it, thereby achieving the government’s strategy.
Industry calculations show that more than half of the targeted increase in annual copper production must come from “greenfield” deposits – those deposits that have yet to be discovered. If this is to be achieved, Zambia will need to significantly increase mining exploration and the investment required to finance this high-risk activity. If we are truly interested in driving investment into our economy, we must make it clear that investors’ property rights will be respected at all costs.
Unfortunately, the bill will seriously undermine property rights by ignoring the details of mineral cadastre management, potentially forcing the state to acquire shares in new enterprises “for free,” and introducing broad procedural discretion, including the power to usurp the prevailing “first come, first served” permit application criteria. Here and in other provisions, the bill grants unaccountable and arbitrary discretionary decision-making to individual regulators, which clearly creates risks of future corruption. And this comes at a time when mineral cadastre authorities have already taken alarming and inexplicable actions to reallocate or divide up permits.
The regulatory framework for the mining industry is in need of reform, and logic dictates that any reform should achieve the overall strategic goal of substantially increasing production capacity. Furthermore, reforms must transparently spell out expected outcomes so that investors can plan accordingly, and laws must be accurately and clearly drafted to achieve bureaucratic and regulatory efficiencies.
It is not too late to reconsider. With only a few key amendments to the law, the Bill can be restored and serve its purpose. These amendments have been set out in various written documents submitted to Parliament. Otherwise, the process of repairing these provisions once they have been enacted and once the harmful effects have already been seen will require a large number of amendments to the law.
This would return Zambia to its status as the world’s most unstable copper mining jurisdiction, reversing the fragile growth of the past three years.
Published by the Zambia Association of Mineral Exploration Companies (AZMEC),
Zambia Chamber of Mines (ZCM)
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