CASE STUDY 1 Zambia’s policy reforms to promote investment in mining33 Zambia, a major producer of copper and cobalt, accounted for ~3% of global copper output in 2023. Recent reforms, including a new mining law, aim to streamline regulation and boost local participation in critical mineral production.Impact of Zambia’s policy reforms34 Zambia has set an ambitious goal of producing 3 million tonnes of copper by 2031 . Although this is a stretch from current production levels of 700,000 tonnes, ongoing reforms are expected to drive significant benefits, with investment inflows potentially increasing output to 1 million tonnes by 2026. Challenge Uncertain policy regime: Zambia’s mining sector faced a volatile tax regime, complex laws and frequent policy shifts tied to copper prices. Sudden hikes in royalty rates, double taxation and a 5% import duty on copper concentrates discouraged investment. Macroeconomic conditions: Zambia defaulted on its external debt post-COVID, with a debt-GDP ratio of 115%. Heavy reliance on copper and lack of economic diversification exposed the country to fiscal and trade imbalances due to price volatility. Underinvestment in exploration and mapping: About 45% of Zambia’s land remains unmapped, and 55% was mapped 25 years ago. Macroeconomic challenges have deterred private exploration, leaving much of the country’s mineral potential untapped. Low value addition: Reliance on exports of unprocessed minerals has led to limited value-adding downstream processing activities. This has prompted resource nationalist policies, like import duties on concentrates, to drive local beneficiation and retain more value. Solution National Mineral Resources Development Policy 2022: Addresses policy challenges by promoting licensing transparency, stable taxation, exploration incentives, artisanal mining formalization, local ownership and value addition. Zambia’s budget of 2023: Introduces tax reforms, reduces mineral rights transfer tax (10% to 7.5%), allows royalty tax deductions and applies presumptive tax to artisanal miners. Minerals Regulation Commission Act 2024: Centralizes regulation, streamlines licensing, enforces compliance, curbs speculative licenses, expands local mining rights and introduces a transfer tax to stabilize revenues. Impact Production targets: According to Zambia’s finance minister, copper output could increase from 700,000 tonnes in 2022 to 1 million tonnes by 2026, driven largely by investments in expanding mining production.35 Licensing: Information and communication technology can be further integrated and stakeholder collaboration can be increased, leading to enhanced transparency, efficiency and accountability in licence management. Taxation: A stable tax regime can help create consistency for investors and revised property transfer tax rates can increase the government’s share of revenues. Partnerships: Mercuria Energy Group, a commodity house, has provided financing and is teaming up with Zambia on a metals trading venture to secure access to key resources.36 As demand for critical minerals grows, bankable, ESG-aligned projects in frontier markets are essential for the energy transition. De-risking tools, like blended finance and local bank syndication, can help close the funding gap. In SAR, perceived risks make it difficult to secure capital, underscoring the need for strong technical studies and investment de-risking to attract financing.2.2 Investment de-risking Securing Minerals for the Energy Transition: Finance for Southern Africa 18

Securing Minerals for the Energy Transition 2025