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  • GDP, US$bn: 22.1
  • GDP per capita, US$: 1,333.3
  • Population, mn: 16.2
  • Inflation, CPI ave: 18.2
  • FX, LCY/US$: 10.3
  • Budget Balance, % of GDP: -5.4
  • Mining GVA, US$bn: 1.0
  • Mining Industry Value, US$bn: 1.4
Regulatory Risk Rating
36
0
100
Score: 36
Severe Risk
The 2015 law has introduced areas of ambiguity and discretion that were agreeably absent from Zambia’s 2008 mining code. Moreover the law has retained grains of nationalism which infiltrated the previous code, enshrining potential inefficiency for a developer, such as the need for consent to export mineral products, preferential sourcing of Zambian goods and services and the requirement for approval to suspend or curtail operations. Since the failure to observe the code gives rise to the potential for loss of licence, the code introduces substantial risk to an investor.

Corruption Potential Index

Score: 15
Extremely High Corruption Potential

Corruption Risk Index

Score: 52
Moderate Corruption Risk

Regulatory Risk Rating

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Mining Overview Commentary plus sign

ZAMBIA - MINING REGULATIONS

GENERAL

Zambia, officially the Republic of Zambia, is one of 16 landlocked countries on the African continent, bordered by the Democratic Republic of Congo to the north, Tanzania and Malawi to the north-east and east, Mozambique, Zimbabwe, Botswana and Namibia to the south-east and south and Angola to the west.

Zambia is a presidential republic. Since 2011 the country has been governed by the Patriotic Front, a centre-left political party which was founded in 2001. Following the death in office of President Michael Sata, current President Edgar Lungu was elected to serve the remainder of the presidential term and was subsequently re-elected in 2016, starting his five-year term in September of that year.

According to the World Bank, Zambia had one of the fastest growing economies (at an average of almost 7% per year) until 2014, when falling copper prices began to take its toll on the country’s economy. Though it has recovered somewhat in recent years, with growth in 2017 estimated at around 3.7%, Zambia’s lack of economic diversification, issues with electricity supply and high fiscal-debt continue to effect the country’s ability to recognise its economic potential.

Zambia is one of Africa’s top three cobalt producers and amongst the top ten copper producing countries in the world. The country is also recognised as a leading emerald producer. Whilst copper dominates the industry, Zambia is also known to produce precious metals, coal and industrial minerals. According to EITI, the extractive industries in Zambia constituted around 47% of all exports and 10% of GDP in 2015.

PRINCIPAL LEGISLATION AND REGULATOR

In 2015, Zambia replaced its existing law, which dated back to 2008, with the Mines and Minerals Development Act 2015 (MMDA). The law is further supplemented by The Mines and Minerals Development (General) Regulations 2016 (MR) and was amended in 2016 by the Mines and Minerals Development (Amendment) Act 2016 (2016 Act). Other relevant laws include The Environmental Management Act 2011; The Environmental Management (Licensing) Regulations 2013; the Mines and Minerals (Environmental) Regulations 1997; and the Environmental Protection and Pollution Control (Environmental Impact Assessment) Regulations 1997.

The Zambian mining industry is overseen by the Ministry of Mines and Minerals Development (Ministry), headed by the Minister of the same title (hereinafter Minister). Various departments operate within the Ministry, including: the Mining Cadastre Office which was established under the MMDA with the purpose of receiving and processing applications for mining rights and Mineral Processing Licences, administering mining rights and Mineral Processing Licences, and maintaining public cadastral maps and registers (see Art. 8, MMDA); the Mines Safety Department responsible for all health and safety matters of employees of mining operations; the Mines Development Department which issues and administers mining rights and various permits and also monitors operations to ensure they are carried out in accordance with the relevant programmes; and the Department of Geological Survey which compiles data and information on the geology of the country and the mineral sector.

The MMDA also established a Mining Licensing Committee (MLC), which has as its members: the Director of Mines; the Director of Geological Survey; the Director of Mines Safety; the Director of the Mining Cadastre; representatives from the ministries of environment, land, finance and labour; and representatives of the Attorney-General, the Zambia Development Agency and the Engineering Institution of Zambia. The purpose of the MLC is to consider applications for mining rights and non-mining rights; grant, renew or refuse to grant or renew such rights; terminate, suspend or cancel such rights; amend the terms and conditions of mining and non-mining rights; and advise the Minister on various matters under the MMDA (Art. 6(1), MMDA).

GRANTS AND FORMS OF MINERAL TITLE

Collectively referred to as ‘mining rights’ the MMDA provides for both Exploration Licences and Mining Licences, details of which are provided below. Legal or natural persons shall be disqualified from holding mining rights if they meet certain criteria, including if they are not incorporated under the Companies Act; do not have a registered office established in Zambia; are under the age of 18; or are an un-discharged bankrupt (see Art. 14, MMDA). Mining rights may be granted on application or via tender process in areas of known mineral wealth (Art. 18 – 19, MMDA).

  • Exploration Licences: Applications must be submitted in the prescribed form and minimum land areas apply for small-scale and large-scale exploration (see Art. 21, MMDA). The MLC shall consider the applicant’s suitability, including its financial and technical capacity, the estimated expenditure and the programme of operations (Art. 22, MMDA). Exploration Licences shall be granted within 60 days of application (Art. 23(1), MMDA). Where the application is rejected, reasons shall be provided in writing (Art. 22(5), MMDA). The Exploration Licence confers on the holder the exclusive right to carry out operations in the licence area for the minerals specified (Art. 23(2), MMDA). Licences are granted for a period of four years, renewable on application for further periods of up to three years (Art. 24, MMDA). The Exploration Licence shall prescribe the required expenditure amounts (Art. 25(1)(d), MMDA). A programme of exploration operations must be submitted.

 

  • Mining Licences: Applications must be submitted in the prescribed form and minimum land areas apply for large-scale mining (Art. 30, MMDA). In considering an application, the MLC shall take into account various factors, such as whether the deposits justify commercial exploitation; if the proposed programme of operations is adequate and compliant with any environmental brief or assessment; if the applicant has the financial and technical capacity; and if the feasibility study is bankable (Art, 31(1), MMDA). Mining Licences shall be granted within 90 days of application (Art. 32(1), MMDA). If an application fails to comply with the terms of the law it shall be rejected and written reasons for rejection shall be provided to the applicant (Art. 31(3), MMDA). The Mining Licence confers on the holder the exclusive right to carry out mining, processing and exploration in the licence area (Art. 32(2), MMDA). Licences are granted for a period not exceeding 25 years for large-scale mining (Art. 34(c), MMDA).

 

Note that citizenship requirements apply in relation to artisanal and small-scale mining (Art. 29, MMDA).

The MMDA also provides for certain non-mining rights including Mineral Processing Licences; Mineral Trading Permits; Mineral Import / Export Permits; and Gold Panning Certificates (Art. 13(2), MMDA).

Mining rights and Mineral Processing Licences may only be transferred with the consent of the Minister (Art. 66, MMDA). Change of control restrictions apply (Art. 67, MMDA).

DEVELOPMENT CONSIDERATIONS

Mining rights holders are required to give preference to Zambian products, materials, contractors, suppliers and service agencies in the course of mining operations; preference in employment must also be given and training programmes for Zambian citizens must be conducted (Art. 20, MMDA).

Exploration Licence holders must submit a decision letter from the Zambian Environmental Management Agency to the Mining Cadastre Office prior to the commencement of operations (Art. 25(1)(a), MMDA). Notice must be given to the Director of the Mining Cadastre within 30 days of a discovery of possible commercial value (Art. 25(1)(c), MMDA). Records provided for under Article 25, MMDA must be submitted once every three months.

Attached to each Mining Licence shall be the programme of mining operations as approved by the Director of the Mining Cadastre; the applicant’s undertakings for the employment and training of citizens and promotion of local businesses; the capital investment forecast and the undertaking for environmental management (Art. 32(2), MMDA). Holders must meet the obligations outlined under Article 35, MMDA.

Production levels and commencement of operations are controlled under the terms of the law (see Art. 36 et seq., MMDA). Amendments to programme of exploration or mining require the approval of the Director of the Mining Cadastre (Art. 65, MMDA).

Permission from the landowner or legal occupier must be obtained prior to the commencement of operations and compensation terms are provided (see Part IV, MMDA).

Annual charges shall apply over the licence area, as prescribed by the Minister (Art. 77(1), MMDA). Royalty rates are explicitly stated under the 2016 Act.

ENVIRONMENTAL REGULATION

See Zambia - Environmental Overview Commentary.

Revision History

Uploaded - October 2018

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Environmental Overview Commentary plus sign

ZAMBIA - ENVIRONMENTAL REGULATIONS

GENERAL

Zambia is a landlocked country in the southern part of Africa, bordered by the Democratic Republic of Congo, Tanzania, Malawi, Mozambique, Zimbabwe, Botswana, Namibia and Angola. The name ‘Zambia’ was given upon independence in 1964 and is taken from the Zambezi River, the source of which lies in the north-west of the country.

Zambia lies on the high, central plateau region of the African continent and its terrain features numerous mountains, hills and rifts – with a mean elevation of over 1,100 metres. The Zambezi river, Africa’s 4th longest, runs from its source close to the border with the DRC and Angola through the country. Victoria Falls, which sits on the Zambia – Zimbabwe border, is recognised as the largest waterfall in the world due to having the largest sheet of falling water. Zambia has a tropical climate, though the impact of elevation can result in cooler temperatures and heavier rainfall in certain regions.

Zambia’s tourism industry is largely focused on its wildlife and the series of national parks and reserves located throughout the country. The majority of the country’s ‘large mammal’ population, such as lions, elephants, rhinos, and leopards are now found almost exclusively within these areas. Beyond the protected areas, baboons, hippos, zebras, various monkey species, antelope and wildebeest can be sighted. Nile crocodiles are commonly found in the country’s network of rivers and the Nile monitor, one of the world’s largest lizards, is known to frequent swampland. In terms of flora, Zambezi teak, African teak and balsam trees are found in Zambia’s forests and woodlands. According to reports, ‘floriculture’ is one of the fastest growing export industries in the country. Roses, of which Zambia has more than 60 species, dominate the export market accounting for 95% of the floriculture industry. Other flowers include saltbush, amaranth and bishop’s weed. Zambia’s national animal is the African Fish Eagle; the national flower is the bougainvillea.

Illegal wildlife trade and poaching, deforestation, pollution and human settlement are amongst Zambia’s environmental challenges (WWF).

PRINCIPAL LEGISLATION AND REGULATOR

Though environmental laws have been passed in Zambia as recently as 2013, the legal framework relevant to the Environmental Impact Assessment (EIA) process and the mining industry dates back to 1997. The primary environmental laws to consider are as follows: The Environmental Management Act 2011 (EMA); The Environmental Protection and Pollution Control (Environmental Impact Assessment) Regulations 1997 (EIA Regulations); The Mines and Minerals (Environmental Regulations) 1997 (MMER); and The Mines and Minerals Development Act 2015 (MMDA).

Zambia’s environmental management is overseen by the Zambian Environment Management Agency (ZEMA), which, according to its website, is an independent regulator and co-ordinating agency with a mandate to do all that is necessary to protect the environment and control pollution, so as to provide for the health and welfare of persons, animals, plants and the environment. Before the passing of the EMA, the ZEMA was known as the Environmental Council of Zambia; as such references to ‘Council’ in the EIA Regulations and MMER should be read as the ZEMA. The ZEMA is run by a Board, established under the terms of Article 11, EMA and supported by a Directorate, headed by the Director-General of the ZEMA (Director-General). The MMER and the EIA Regulations also make reference to the authorising agency – which in the case of the mining industry is the Ministry of Mines and Minerals Development (Ministry). The Director of Mines Safety, who also sits on the ZEMA Board, is closely involved with the EIA process under the terms of the MMER. Zambia also has a Minister of Water Development, Sanitation and Environmental Protection (Minister).

EIA PROCESS

Pursuant to Article 12(2) of the MMDA, a person shall not undertake exploration, mining or mineral processing activities without obtaining the prior written approval of the environmental impact assessment by the ZEMA, as provided for under the EMA. The relevant article of the EMA states that a person shall not undertake any project that may have an effect on the environment without the written approval of the ZEMA and except in accordance with any conditions imposed (Art. 29, EMA). The article goes on to state that permits / licences for such activities cannot be granted unless the ZEMA issues an approval for the project or the permit / licence is conditional upon such approval (Art. 29(2), EMA).

The EIA process in Zambia is a two-stage system. In the first instance a Project Brief must be submitted and shall be following by the preparation and submission of an Environmental Impact Statement (EIS) where it is found that the project is likely to have a significant impact on the environment. Mining and mineral processing activities are identified under the First Schedule of the EIA Regulations as activities that require a Project Brief, whilst ‘Mining: Including Quarrying and Open Case Extraction’ of copper, coal, precious metals, industrial metals and gemstones (amongst other minerals) are listed under the Second Schedule as requiring an EIA. Further, the terms of the MMER suggest that proponents of both exploration and mining activities must submit a Project Brief, with the need for an EIA decided on the basis of the information contained within (see Reg. 3(1) and 4(1), MMER).

This commentary aims to provide an overview of the EIA process in Zambia. During the analysis of the law certain minor discrepancies were noted between the terms of the MMER and the EIA Regulations. Where relevant these discrepancies have been highlighted.

Step One – Project Brief

In the first instance a Mine Manager must be appointed who shall be responsible for the employment of a competent person (as defined under Reg. 3(4), MMER) to prepare the Project Brief (Reg. 3(5), MMER). The content requirements for the Project Brief are provided under both sets of regulations, with the MMER providing specific detail on the requirements which pertain to mining projects (see First Schedule, MMER; see also Reg. 4, EIA Regulations). Generally speaking, the Project Brief must contain information on the site, the project objectives and main activities, the expected impacts and any mitigation measures. A brief statement on the impact of the exploration or mining operations on the environment and information on any remedial action to be implemented must be submitted alongside the Project Brief (Reg. 3(6), MMER).

Under the terms of the EIA Regulations, the proponent must submit six copies of the Project Brief to the ZEMA (the MMER suggest these documents should be submitted to the Director of Mining Safety) (see Reg. 5(1), MMER). The ZEMA shall transmit the Project Brief to the Ministry for comments within seven days of receipt (Reg. 5(2), EIA Regulations). The Director of Mining Safety shall comment on the Project Brief within 10 days of receipt and provide such comments to the ZEMA, though note that under the EIA Regulations the time period for comment is 30 days (Reg. 3(7), MMER; Reg. 5(3), EIA Regulations). The ZEMA shall inform the Director of Mines Safety of its decision within 40 days of receipt of the Project Brief (Reg. 3(8), MMER; Reg. 6(2), EIA Regulations). Incomplete Project Briefs must be resubmitted within 21 days of notification (Reg. 3(9), MMER).

Following the submission and consideration of the Project Brief, the ZEMA / Director of Mining Safety (see Reg. 6(2), EIA Regulations; see Reg. 3(10), MMER) may grant permission for development of the project if the mining project has no significant impact on the environment or contains mitigation measures to ensure the acceptability of the anticipated impacts.

Step Two – EIS

Where the Director of Mining Safety / the ZEMA determines that the exploration or mining operations are likely to have a significant impact on the environment an EIS must be prepared (Reg. 4(1), MMER; Reg. 7(1), EIA Regulations). Notably projects identified under Schedule 2, EIA Regulations (see comments above) shall require an EIS as mandatory (Reg. 7(2), EIA Regulations).

Terms of Reference (TOR) must be prepared by the proponent in consultation with the ZEMA (Reg. 8(2), EIA Regulations). The issues to be considered in preparing the TOR are provided under the Third Schedule, EIA Regulations. Issues and impacts for consideration include: ecological considerations; social, economic and cultural considerations; landscape; land use; water; and air quality (see Third Schedule, EIA Regulations). During the preparation of the TOR, and in order to determine the scope of the work for the EIS, the proponent must conduct a public consultation process, which shall involve government agencies, local authorities, non-governmental and community-based organisations and interested and affected parties (Reg. 8(2), EIA Regulations). Following the consultation, draft TOR shall be submitted, taking into account the requirements of the Third Schedule of the EIA Regulations and the outcomes of the public consultation process. The draft TOR must be approved by the ZEMA within five days; if the TOR are unacceptable, final TOR shall be prepared by the proponent with the assistance of the ZEMA (Reg. 8(3)–(4), EIA Regulations).

The EIS must be prepared by a competent person (Reg. 4(2)-(3), MMER) the name and qualifications of which must be submitted to the ZEMA and subsequently approved (Reg. 9, EIA Regulations). Guidelines for the EIS are provided under the Fourth Schedule, EIA Regulations and may be supplemented by additional guidelines from the ZEMA (Reg. 9(4), EIA Regulations). Alongside the TOR, content requirements for the EIS are provided for under Regulation 5, MMER and Regulation 11, EIA Regulations, with the former again providing industry specific detail. An environmental management plan and rehabilitation plan must form part of the EIS (Reg. 5(1)(b)-(c), MMER). The EIS must also contain an executive summary, stating the main findings and recommendations (Reg. 12, EIA Regulations).

Prior to the submission of the EIS, the proponent is required to take all measures necessary to seek the views of the people in the communities that will be impacted by the project (Reg. 10(1), EIA Regulations). In doing so, the proponent must publicise the project in the mass media in a language understood by the community for a period of not less than 15 days and subsequently publicise the project throughout the process (Reg. 10(2)(a), EIA Regulations). Following the initial 15-day period, meetings must be held with the affected communities to present the project and obtain the views of those consulted (Reg. 10(2)(b), EIA Regulations).

Twelve copies of the EIS shall be submitted to the ZEMA (though note that the MMER states that only nine copies be submitted to the Director of Mines and Safety) (Reg. 14(1), EIA Regulations; Reg. 4(1), MMER). If the EIS is unacceptable or significantly incomplete, the Director shall notify the proponent within 30 days, advising on the issues that need further consideration. The EIS should then be amended and resubmitted within 30 days (Reg. 4(6), MMER). Following submission, the Ministry shall have a 30-day window to submit comments to the ZEMA on the EIS (Reg. 15, EIA Regulations). Copies of the EIS shall also be publicised locally and nationally and shared with all relevant government bodies, community organisations and affected parties (Reg. 16(1), EIA Regulations). Public meetings may also be held (Reg. 16(2), EIA Regulations). Comments on the EIS must be submitted to the ZEMA within 20 days of the last media notice, though this period may be extended by up to 15 days if contentious issues arise or the project is remote enough to cause logistical issues with the consultation process (Reg. 16(3)-(4), EIA Regulations). Prior to the issuance of a decision letter, further public hearings may be held on the basis of comments submitted to the ZEMA or if the ZEMA is of the opinion that such hearings are necessary for the protection of the environment (Reg. 17 - 18, EIA Regulations). The procedure for such meetings, including timelines and reporting requirements is explicitly stated (Reg. 18 - 19, EIA Regulations).

When reaching a decision on the EIS, the ZEMA shall take into account: the impact predictions made; the comments from consultations / hearings and those submitted to the ZEMA; reports from public hearings (if applicable); and any other relevant factors (Reg. 20(1), EIA Regulations). Decisions shall be issued within 30 days of a public hearing or, where a public hearing has not taken place, within 20 days from submission of the EIS (Reg. 20(2), EIA Regulations). The decision letter shall state if the project has been approved, rejected, or approved subject to certain conditions (Reg. 21, EIA Regulations). Reasons for rejection shall be provided and any conditions specified (Reg. 22, EIA Regulations). The decision on the project shall be communicated to all parties within 15 days (Reg. 23, EIA Regulations).

Decisions may be appealed in writing to the Minister within 10 days. A decision on any appeal shall be reached within 14 days. The decision of the Minister may be appealed to the High Court (Reg. 24, EIA Regulations).

Terms on environmental audits (which may take place at any time during the course of the project) are provided under the MMER and EIA Regulations (see Reg. 8, MMER; see Part VII, EIA Regulations). Note that certain other health, safety and environmental terms are also provided for under Part VI of the MMDA.

Revision History

Uploaded - October 2018

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