Major legal, regulatory and institutional reforms expected in Zambia

Zambia’s Mines and Minerals Act 1995 will be overhauled this year, says that country’s Mines and Minerals Development deputy minister Norman Chibamba.

”My ministry is this year instituting major legal, regulatory and institutional reforms in order to align policy and practice so that we can improve on our service delivery to investors.” Chibamba says the 1995 legislation introduced ”international standards and best practices for public supervision and control of the mining sector” but that, for example, the institutional structure of the mines ministry was not revised to supplement this legislation.

He notes that the practical benefits that mining companies can expect from the reform process will include ”enhanced transparency at all stages of the ministry’s activities; improved fairness in applying the provisions of the act and regulations; continued investment promotion in the mining sector; a diversified mining base exploiting other minerals apart from copper and cobalt; and increased competitiveness for new investment in the mining sector”.

Chibamba adds that there is also a need for all African governments to come up with provisions in mining laws and regulations to encourage mining companies ”to foster backward and forward linkages”. ”It is important that policies and legal and regulatory frameworks which facilitate equitable participation by local businessmen, communities and other stakeholders in mining activities should be in place. ”Some of the key areas to address are preferential employment of local labour; allocation of benefits from mining to local communities; local community allocation of national revenue; and community equity participation.” Chibamba describes investment and government mining policy as closely linked. ”Even the most highly geologically-prospective nation will have difficulty in attracting foreign investment without adequate national policy, and regulatory and fiscal systems. With the rising commodity prices, a country must act quickly to implement policies and legislation that will be effective in attracting foreign investment to its mineral sector.” Chibamba says the level of mineral-sector investment has increased in real terms in Zambia over the last few years, adding that those African nations that have put into place regulatory systems which reduce or allow a company to manage risks at an acceptable level, have, for the most part, also enjoyed increased levels of investor confidence. ”Zambia’s investment climate for the mining sector is good and, because of this, many reputable mining companies have invested from the time privatisation of the mines was completed in March 2000. ”Nearly $1,5-billion has been invested in the mining industry in Zambia.” Chibamba notes that a country’s mineral policy functions as a useful regulatory tool that serves two important functions. ”Firstly, it provides the mineral industry with a clear statement on the government’s expectations and intent towards the industry. Secondly, it provides lawmakers and regulators with broad guidance. In addition, government lays down the regulatory and fiscal framework that will affect private-sector investment ”“ thus, government directly determines the investment climate.” He adds that Zambia is continuously working towards improving its investment climate. It has, therefore, introduced incentives to attract additional investment in exploration and mining, such as an exemption which gives authority to the holder of a mining right to import machinery and equipment for use in exploration and mining duty free.

”This is aimed at alleviating the high cost of investment in the sector.” He says although Zambia has no restrictions on the export of mineral ores ”“ such as high export duties in order to pomote downstream processing ”“ government does encourage the local processing of minerals. Seen holistically, Zambia has managed to create a ”conducive, stable and predictable policy, legal and regulatory framework, and a competitive fiscal regime aimed at attracting investment in the mining sector”, says Chibamba.

”The existing policies and openness of my government have greatly stimulated investment in the sector, leading to high copper production. ”The annual copper production following the privatisation of Zambia Consolidated Copper Mines in 2000 increased steadily from 230 000 t to nearly 500 000 t by the end of 2005.

Chibamba notes that Zambia has not been alone in its reform process.

Many African countries embarked on what he terms a ”radical reform process” during the 1980s and 1990s.

”State enterprises were privat- ised, and efforts and resources were deployed to improve the investment climate. ”African countries began to adopt new mining laws and legislation more favourable to private investors. ”New mineral policy, regulatory and administrative frameworks were formulated and established.

Source: www.miningweekly.co.za