Is the New Mining SPV a Duplicate of ZCCM?
On June 11, 2024, the Zambian government took a significant step towards reforming the mining industry. At the 11th Special Cabinet Meeting held at State House, President Hakainde Hichilema chaired a resolution to establish a Special Purpose Vehicle (SPV) for investment and trading in mineral resources.
The move aims to address the limitations of the current divided payment model for mineral resources. By adopting a production-based sharing mechanism, the government seeks to ensure that the benefits of mining accrue to the Zambian people. The new business model will allow for actual sharing of minerals produced, government-negotiated prices, and guaranteed revenue for the sale of minerals.
While some may view the SPV as a duplicate of Zambia Consolidated Copper Mine (ZCCM), it is designed to learn from ZCCM’s legacy issues and failures. The government acknowledges that ZCCM has struggled to function effectively, particularly in the face of the evolving mining landscape. By establishing the SPV, the government hopes to create a more effective and efficient vehicle for investment in the mining sector.
However, the government must ensure that the SPV does not compete with small-scale local miners. Instead, it should focus on partnerships and empowerment to support the growth of the industry. Additionally, investing in research and development will be crucial to unlocking the full potential of the mining sector.
Details on how the SPV will operate, particularly in terms of investing in projects as equity partners, remain scarce. Mining is a capital-intensive industry, and it is unclear how the SPV will navigate this challenge. Further information is needed to understand the SPV’s role in project financing and its potential impact on the industry.
In conclusion, the establishment of the SPV marks a significant shift in Zambia’s approach to the mining industry. While it may share similarities with ZCCM, the SPV presents a better vision for the future of Mining in Zambia. The SPV is not a duplicate of ZCCM, but rather a new entity designed to address the limitations of the current mining industry. The SPV marks a significant shift in Zambia’s approach to the Mining Industry, presenting a better vision for the future of mining in Zambia.
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