By Maimbolwa MulikelelaTHE just-ended sixth edition of the Zambia Mining and Energy Conference (ZIMEC) held in Lusaka underlined the country’s ability to embrace forward-thinking and business-friendly policies amid the economic challenges.
Zambia, like many other commodity-producing countries in the world, has been affected by the current dip in copper prices due to sluggish growth in the advanced economies.
Given the interplay of external forces, it is believed that the implementation of forward thinking and business-friendly policies will attract new investment in the energy and mining sector.
With Zambia being dependent on mining for 80 per cent of its export revenues and the mines consuming 55 per cent of the country’s electricity, the connection between mining and energy is critically important.
Currently, the country is experiencing a power deficit of about 1000 megawatts due to the low rainfall recorded during the 2015/16 season.
This is mainly because 99 per cent of Zambia’s electricity production is hydro-based.
However, these challenges in the mining and energy sectors present an opportunity to both the Government and private sector to think outside the box in trying to find lasting solutions.
For instance, the Government recently revised its fiscal regime to enable the mining operations to remain profitable in the face of low metal prices.
President Edgar Lungu says his Government will continue to take steps to make Zambia an investment destination of choice through its policy which provide for a private sector led development for the mining and energy sectors.
This has made investment especially in the mining sector competitive and transparent.
To make this a reality the Government pledged to work closely with the private sector to come up with solutions that will in the long-run minimize the effects of external shocks in the mining industry.
“Mining remains critical because it can provide the raw materials or inputs as well as the market for the manufactured goods.
“Government is committed to ensuring that mining is integrated in the economy by facilitating both backward and forward linkages between mining and other sectors to ensure continued growth of the Zambian economy,” President Lungu says.
Therefore, it is noted that providing a favourable business environment will inspire confidence and attract meaningful investment in the mining and energy sectors.
In addition, the 2015 Mining and Minerals Development Act has further provided for growth of the sector to ensure it significantly contributed to the economic development of the country.
This will be done by providing jobs to Zambians and contributing to the Gross Domestic Product (GDP)  but by allowing more Zambians flexibility to own productive mines.
In the same vein, Government is encouraging economic diversification both within the mining and other sectors such as agriculture and manufacturing.
In the area of energy, President Lungu says the current challenge of low water levels points to the need to diversify the energy sources stating that the Government is implementing measures to encourage investment in alternative energy sources.
“We have an opportunity to develop other energy sources and reduce our dependence on hydropower,” he says.
The 2016 edition of ZIMEC was held under the theme “Mining and energy on the growth path to support and grow the Zambian economy” which also featured power Zambia 2016.
United States ambassador to Zambia Eric Schultz pointed out that the conference has highlighted Zambia’s ability to embrace forward thinking and business-friendly policies that attract new investors in the energy and mining sector.
It is clear that the key to meeting Zambia’s power generation needs is an efficient way, whether for mining or other uses, lies in private sector investment in renewable energy sources, especially solar power.
To attract such private investment the energy sector requires a pro-investment enabling policy environment, streamlined and transparent processes for negotiating power purchasing agreements, and a cost reflective tariffs structure.
“The United States is committed to helping Zambia achieve energy security, through the power initiative, which we co-financed with Sweden, in partnership with the Word Bank and African Development Bank.
“Energy shortages over the past years have contributed to the closure of several mines, with devastating effect on the Zambian economy through lost export and fiscal revenues, the loss of thousands of jobs and Kwacha depreciation,” Mr Schultz observed.
But the story of Zambian mining should not only be about copper.
Zambia Chamber of Mines president Nathan Chishimba says there is undeniable evidence that Zambia is capable of producing a wide range of minerals materials if concerted efforts are made to address the long term sustainability of the mining sector.
As the world continues to develop and industrialise, it drives demand for copper stating that despite the current downturn, copper has a great future.
Since the privatisation, approximately US$12 billion has been invested in Zambia’s mines with Kalumbila and the recent modernisations of Mopani are just the latest shining examples.
“Policy instability and friction between Zambia’s Government and mining industry have benefited no-one in recent years. But, I truly believe those days are past us. Since early this year this Government has shown that it is willing to listen,” Mr Chishimba notes.
He pointed to the recent decision to lower the mineral royalty tax, the face of budgetary pressures, as evidence of long-term policy making to safeguard the future health of the country’s pre-eminent industry.
For Zambia to meet its aspiration to become a middle income country by 2030, it needs a sustainable and viable mining sector that truly contributes to Zambia’s development.
In order for it to achieve this, the World Bank indicate that the mining industry must generate many good and reliable jobs, share its wealth broadly and managing the impact on the environment.
For example, Chile through its smart policies has turned this natural resource wealth into building an upper middle income country with poverty levels of only 15 per cent compare to 55 per cent in Zambia.
World Bank country manager Ina Ruthenberg indicated that smart policies can quiet easily be identified but implementing them is much harder.
“We deliberated over this internally and have come to the conclusion that in Zambia the most important task is to invest in rebuilding trust among all actors. There is an urgent need for a deeper dialogue around the mining sector in Zambia,” Ms Ruthenberg says.
Investing in trusted information that is accessible to all supplied by both the companies and the Government is a way forward.
There is, thus, a need for a fresh start and the ZIMEC critically contributed to the cause of renewed hope for new investment in the mining and energy sector.