Zambia Mining Report Q1 2013

Includes 3 FREE quarterly updates

Zambia's mining sector is set to continue the recovery seen over the last decade. The country had declining copper output throughout the 1990s, but a mixture of low taxes, privatisation and elevated copper prices has seen a substantial boost to investment and output. We expect the value of the mining sector to reach US$1.0bn by 2017, from US$770mn in 2011, marking an annual average growth rate of 4.5%.

Steady Growth On The Horizon
Zambia - Mining industry Value, 2000-2017
e/f = estimate/forecast. Source: BMI, UN

Zambia's mining sector has been highly amenable to foreign investment since the privatisation of the state controlled Zambia Consolidated Copper Mines (ZCCM) at the end of the 1990s. Indeed, while one of the opposition parties, the Patriotic Front, has stated that it seeks greater control of the mining sector and will increase taxes on mining companies, our Country Risk team expects the ruling party to remain in power and sustain the country's investor-friendly outlook.

Aside from its substantial high-grade copper reserves, Zambia's mining sector is favourable to mining companies, as the government recently ruled out the reintroduction of the windfall tax on mining companies' profits. This gives Zambia a competitive advantage over other large copper producers, such as Australia, Chile and Peru, where levies on mining output have been proposed or already implemented. We expect Zambia to remain a business-friendly environment, as foreign investment in the country's mining sector is a key part of the government's plans to maintain strong growth over the coming years.