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Mining industry

Standing

What is the nature and importance of the mining industry in your country?

Zambia has a long history of mining, predominantly in copper and cobalt. Historically, mine development has been concentrated in an area known as Copperbelt Province. The Copperbelt mines are renowned for their high-grade deposits.

Exploration activity in recent years has raised the potential for opening up new centres for copper mining in the north-west and east of the country. Zambia’s flagship copper project, Lumwana Mine, was commissioned in December 2008 and has been a successful project producing 125,000 metric tonnes in 2015 alone.

Zambia also hosts small-scale gold, coal, manganese and zinc deposits. In recent years, exploration has significantly expanded throughout Zambia to include prospecting for non-traditional minerals such as nickel and uranium, with some exploration for diamonds. The country’s first nickel mine became operational in 2008. Zambia is also renowned for its gemstones and ranks as one of the world’s leading producers of high-quality stones. Recent exploration work has also revealed the presence of significant deposits of coal-bed methane.

Having undergone a severe decline in the late 1980s and early 1990s, the mining sector had begun to perform well when productivity was severely affected by the global economic downturn in 2008, which had a negative impact on the global mining industry in general. The decline in commodity prices between 2015 and 2016 also had a negative impact on Zambia’s mining productivity. The recent resurgence of copper prices, however, presents an opportunity for increased productivity in the next few years.

Since independence in 1964, the mining industry has provided the traditional base for the country’s foreign exchange earnings and continues to be the major contributor to export receipts, accounting for more than 70 per cent of Zambia’s export earnings as at 2017. The mining sector and its support industries provide major employment and the infrastructure backbone to areas that would otherwise lack the impetus for sustained development.

Target minerals

What are the target minerals?

The target minerals are mainly base metals, platinum group metals, uranium and gold. However, the Ministry of Mines Mining Cadastre Office has reported a recent increase in exploration applications for the mining of manganese, lead and zinc as well as cobalt, which are metals that are traditionally used for the development of battery technologies.

Regions

Which regions are most active?

Concentration of mining activity in Zambia has recently diversified out of the Copperbelt Province into virtually all the other nine provinces but mainly the North-Western Province (largely viewed as ‘the new Copperbelt’), Southern Province, Luapula Province, Central Province and Eastern Province. For a more detailed view of the spread of mining activity around Zambia, refer to the Zambia Mining Cadastre Portal at http://portals.flexicadastre.com/zambia/.

Legal and regulatory structure

Basis of legal system

Is the legal system civil or common law-based?

The Zambian legal system is based on the common law tradition. Most of its private and public law has followed the English legal system or has been heavily influenced by it. Zambian civil procedure is influenced by English law and is reliant upon many of the English civil procedures and practices.

Regulation

How is the mining industry regulated?

Zambia’s mining industry is principally regulated by the government through the Mines and Minerals Development Act No. 11 of 2015 (the Mines Act) and the regulations issued thereunder.

The Mines Act provides for the administration of the mining sector and includes the establishment of the offices of the director of mines, who is the chief administrator and is responsible for supervising and regulating the proper and effectual development of mines and conduct of mining operations in accordance with the provisions of the Mines Act; the office of the director of geological survey, who is responsible for undertaking the geological mapping of Zambia and the exploration operations on behalf of the Republic, advising the Minister on geological matters and providing data concerning the geology and mineral resources of Zambia, assisting members of the public on information concerning geological matters and maintaining such laboratory and library and record facilities as may be necessary for the performance of the functions under the Mines Act; the director of mines safety who supervises matters relating to the environment, public health and safety in exploration, mineral processing and mining operations; and the director of mining cadastre who is responsible for the administration of mining rights and mineral processing licences.

The Mines Act also establishes a Mining Licensing Committee, which considers applications for mining and non-mining rights and all matters related to the administration of mining and non-mining rights (eg, suspension, termination or amendment of the licences). The committee also advises the minister on all matters related to its functions under the Mines Act.

What are the principal laws that regulate the mining industry? What are the principal regulatory bodies that administer those laws? Were there any major amendments in the past year?

The principal law regulating the mining industry apart from the Mines Act is the Environmental Management Act No. 12 of 2011 (the Environmental Act) and the regulations issued thereunder.

The primary regulatory body for the mining sector is the Ministry of Mines and Minerals Development (the Ministry). The Ministry has several departments that supervise activities within the sector. The Environmental Act is administered by the Zambia Environmental Management Agency (ZEMA).

There have been no amendments to the principal laws regulating the mining industry in the past year.

Classification system

What classification system does the mining industry use for reporting mineral resources and mineral reserves?

Zambia does not have a national classification system for reporting mineral resources and mineral reserves. Ideally, the department of Mineral Development should have in place a system for reporting mineral resources and mineral reserves. Such a national system is yet to be developed. Zambia has also not adopted any other classification systems used in other jurisdictions. However, Zambia has developed a Mineral Production Monitoring Support Project, with funding from the European Union. The objective of this project is to help improve and strengthen the Ministry’s capacity to monitor mining and mineral activity in Zambia. Zambia is also developing a database called the Mineral Output Statistical Evaluation System aimed at improving efficiency and transparency in the reporting of mineral production output by mines in Zambia. This is expected to be finalised in 2019.

Mining rights and title

State control over mining rights

To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?

Following the completion of the privatisation of the mining sector in Zambia in 2000, mining in Zambia is predominantly private sector-driven. The State transformed the parastatal agency that owned virtually all the productive mines and tenements before 2000 into an investment company known as Zambia Consolidated Copper Mines Investment Holdings, which retains minority interests in most large-scale mining projects.

However, all the large-scale mines in Zambia, as well as most prospective tenements, are in private hands with constitutionally protected title to minerals discovered or won. The State deliberately promotes a policy of a private sector-driven mining industry.

There is a clear distinction between mining rights and surface rights under Zambian law with the former largely dominating the latter as a superior right, although a fairly robust compensation mechanism exists for addressing surface rights that predate the mining right.

There is generally one regime for administering all mining rights (the Mines Act) and another regime for administering all surface rights in Zambia (the Lands Act, chapter 184 of the Laws of Zambia).

Publicly available information and data

What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?

The intention under the Mines Act is to render all information in the sector publicly available to private parties although this is not the case in reality. The Ministry is both the repository and depository of information and data for the mining sector. All mining and exploration activities are required to be collected and lodged by mining right holders with the Ministry. Both the government and the private sector may conduct geosciences surveys although the latter is precluded from undertaking such surveys without the consent of the Ministry or over areas where there are existing mining rights. Basic information and data on mining activities and mineralisation are available at http://portals.flexicadastre.com/zambia/. This interface provides information such as details of mining licences that are active in Zambia.

Acquisition of rights by private parties

What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?

All mining rights are acquired in accordance with the provisions of the Mines Act. Mining rights under the Mines Act consist of a mining licence or an exploration licence. A person may therefore only prospect for minerals or carry on mining operations under the authority of a mining right granted under the Mines Act.

All mining rights are acquired by application to the director of mines cadastre by submitting a prescribed form and paying the prescribed fee by either an individual or a company. Mining rights are granted on a first-come, first-served basis by either the director of mines or the director of geological survey, where the application meets the requirements of the Mines Act.

The following mining rights may be acquired: an exploration licence and a mining licence. The Mines Act also provides for non-mining rights, which are a mineral processing licence, mineral trading permit, mineral import permit, mineral export permit and a gold panning certificate.

The Mines Act confers obligations on specific licence holders, as follows.

Exploration licence

The area of land over which an application for an exploration licence is made should be represented by complete and specific cadastre units. The minimum size of a small-scale exploration area is three cadastre units (approximately 0.1km2) and this cannot exceed 300 cadastre units (approximately 10.2km2). For large-scale exploration the minimum area of exploration is 300 cadastre units (approximately 10.2km2), while the maximum area must not exceed 59,880 cadastre units (approximately 1,999km2).

A holder of an exploration licence (ie, a company and its subsidiaries) may not hold a number of licences whose accumulated total area is more than 299,400 cadastre units (approximately 9,999km2). A company that accumulates an exploration area in excess of 149,700 cadastre units (approximately 4,999km2) must pay prescribed additional fees.

Exploration licences are valid for a period of four years and can be renewed for two further periods of three years each. The maximum period of an initial exploration licence is 10 years.

The holder of an exploration licence has the following obligations:

  • commence exploration operations, only once a decision letter (written approval) in respect of the environmental project brief approved by the ZEMA has been submitted to the mining cadastre office;
  • register a pegging certificate within 180 days of acquiring or being granted the exploration licence;
  • expend on exploration operations not less than the amount prescribed or required by the terms of the licence to be so expended;
  • carry on exploration operations in accordance with the programme of exploration operations;
  • notify the director of mining cadastre of the discovery of the mineral to which the exploration licence relates within a period of 30 days of such discovery;
  • backfill or otherwise make safe any excavation made during the course of the exploration operations, as the director of mining cadastre may specify;
  • permanently preserve and safeguard any borehole in a manner directed by the director, and to surrender to government without compensation, the drill cores, mineral samples, the boreholes and any water rights in respect therefore, on termination;
  • unless the director stipulates otherwise, to remove within 60 days of the expiry of the exploration licence, any camp, temporary buildings or machinery installed or erected, or make good any damage occasioned to the ground on account of such removal; and
  • maintain full and accurate records of the exploration operations and submit them quarterly to the Ministry, indicating:
  • the boreholes drilled;
  • the strata penetrated;
  • the minerals discovered;
  • the results of any seismic survey or geochemical, geophysical and remote sensing data analysis;
  • the result of any analysis or identification of minerals removed from the exploration area;
  • the geological interpretations of records maintained on the above matters;
  • the number of persons employed;
  • any other exploration work;
  • the costs incurred;
  • such other matters as may be prescribed by the minister in a statutory instrument; and
  • furnish the directors, at least every quarter, with digital and hard copies of the records.

Mining licence

A mining licence applies to anyone intending to carry on any artisanal, small or large-scale mining. An application for a mining licence is made to the director of mining cadastre in a prescribed manner and form and upon payment of a prescribed fee. The period for which a mining licence is granted depends on the category or class of mining to be undertaken. These are as follows:

  • two years for artisanal mining;
  • 10 years for small-scale mining; and
  • 25 years for large-scale mining.

Artisanal mining may only be undertaken by Zambian citizens or cooperatives wholly composed of Zambian citizens. Small-scale mining may only be undertaken by citizen-owned, citizen influenced or citizen empowered companies. A citizen-owned company (COC) is one where 50.1 per cent of its equity is owned by citizens and in which the citizens have control of the management of the company. A citizen-influenced company (CIC) is one where 5-25 per cent of its equity is owned by citizens who also have significant control of the management of the company and a citizen-empowered company (CEC) is one where 25-50 per cent of its equity is owned by citizens.

The Mines Act confers the following obligations on holders of mining licences:

  • register a pegging certificate within 180 days of being granted the mining licence;
  • develop the mining area and carry on mining operations with due diligence and in compliance with the programme of mining operations and the environmental impact assessment (EIA);
  • take all measures on or under the surface to mine the mineral to which the licence refers;
  • with respect to large-scale mining, implement the local business undertaking attached to the mining licence as well as employ and train Zambian citizens in accordance with the proposal attached to the licence;
  • comply with the proposed forecast of capital investment;
  • permit inspection of the books and records maintained by an authorised officer;
  • submit to the director of mining cadastre reports, records and other information that may be required;
  • maintain accurate technical records of the mining area, copies of all geological reports, accurate and systemic financial records and books of accounts of the mining operations under the licence and operations not related to the mining licence;
  • submit financial year end reports and in the case of large-scale mining returns showing compliance with the obligations specified;
  • maintain security of the licensee’s tenements;
  • submit annual mine plans, sections, primary and secondary developments, ore recovery and treatment and production costs to the demarcate of the mining area in the prescribed manner; and
  • maintain complete and accurate technical records of the operations in the mining area with copies of all maps and geological reports.

The holder of an exploration licence has a preferential but not an automatic right to acquire a subsequent mining right. The Mines Act gives the holder of an exploration licence the opportunity to apply for a mining licence within the exploration area. Such application should be made to the director of mines in the prescribed form and upon payment of a prescribed fee. It appears that the conversion of an exploration licence to a mining licence would be achieved through making an application for such a mining licence within six months before the expiry of the exploration licence.

An application for a mining licence must include the following to be accepted:

  • a statement of the period for which the licence is sought;
  • a statement of the minerals to be mined under the licence;
  • a comprehensive statement of the mineral deposits in the area over which the licence is sought, including details of all known minerals proved, estimated or inferred, ore reserves and mining conditions;
  • the proposed programme for mining operations, including a forecast of capital investment, the estimated recovery rate of ore and mineral products, and the proposed treatment and disposal of ore and minerals recovered;
  • an environmental management plan, including proposals for the prevention of pollution, the treatment of waste, the protection and reclamation of land and water resources, and for eliminating or minimising the adverse effects on the environment of mining operations;
  • details of expected infrastructure requirements;
  • the applicant’s proposal with respect to the employment and training of citizens of Zambia;
  • the applicant’s proposals for the promotion of local business development outlining how the applicant intends to promote;
  • the participation of Zambian entrepreneurs in procurement and supply business opportunities with the applicant;
  • the setting up by Zambian entrepreneurs of import substitution, and repair and maintenance businesses locally;
  • partnership between the Zambian entrepreneurs and foreign suppliers and contractors;
  • skills development to enable the Zambian entrepreneurs to attain quality standards in contract works and supply;
  • a full description, with geographical coordinates, of the area of land for which the mining licence is sought (not exceeding 7,470 cadastre units (approximately 249.498km2), represented by complete and not partial cadastre units;
  • a tax clearance certificate issued under the Income Tax Act;
  • a plan of the proposed mining area prepared in such manner and showing such particulars as the director of mines may require; and
  • such further information as the director of geological survey may require for the disposal of the application.

In addition to the above, the Mines Act also requires an applicant to commission and produce for the director of mines an environmental impact study on the proposed mining operations approved by the ZEMA.

Further, the holder of a small-scale prospecting permit may at any time during the currency of the permit apply to the director for a small-scale mining licence over any part of the prospecting area in the prescribed manner and upon payment of the prescribed fee.

An application for such licence would include the following:

  • an identification of the relevant prospecting permit;
  • a description and sketch of the area of land, not exceeding 180 cadastre units over which the small-scale mining licence is sought, sufficient to enable identification of the area;
  • a description of the proposed programme of mining operations, which shall include a forecast of investment, the estimated recovery rate of ore and the applicant’s proposal for its treatment and disposal;
  • a description to the best of the applicant’s knowledge and belief of the mineral deposits in the area over which the licence is sought;
  • a statement of the duration, not exceeding 10 years, for which the small-scale mining licence is sought;
  • a tax clearance certificate under the Income Tax Act; and
  • such other information as the director may require for the disposal of the application.

Non-mining rights

Mineral processing licence

The holder of a mineral processing licence is granted exclusive rights to carry on mineral processing in the mineral processing area specified in the licence. The following obligations are attached to a mineral processing licence:

  • to commence mineral processing operations once approval has been granted by the Zambia Environmental Agency in respect of the EIA;
  • to carry on mineral processing operations in accordance with the approved programme of mineral processing operations;
  • to submit reports to the directors on sources of ore, concentrates, tailings, slimes, quantities and grade feed;
  • to provide the directors with reports on compliance with safety and environmental standards, as well as labour and production returns; and
  • to submit any other records, reports and other information that the directors may require concerning the operations of mineral processing.

Gold panning certificate

The holder of a gold panning certificate is granted exclusive rights to pan for gold over specified areas along water courses and bodies, but is prohibited from excavating. Gold panning certificates are valid for a period of two years and confer the following obligations on a holder:

  • maintaining accurate and separate production and sales registers;
  • keeping daily records of production and sales, indicating names of buyers, permit numbers, amount and value of gold sold;
  • submitting to the director of mines, by the 15th day of each month, true copies of all entries made in the production and sales in the preceding month;
  • making the records and minerals available within normal working hours, for inspection by an authorised officer;
  • paying mineral royalties in accordance with the Mines Act; and
  • maintaining the panning area in accordance with the provisions of the Environmental Management Act of 2011.

Mineral trading permit

A mineral trading permit confers on the holder exclusive rights to trade in minerals. A citizen, citizen-influenced company, citizen-empowered company or citizen-owned company may apply for a mineral trading permit. The permit is valid for a period of three years and is renewable. A holder of a mineral trading permit has the following obligations:

  • maintaining accurate and separate mineral trading registers for the transactions for each mineral;
  • keeping daily records of buying, selling or processing - indicating the names of buyers and sellers, their licence numbers and the amount and value of the minerals bought, sold, processed, exported or imported;
  • submitting to the director of mines, by the 15th of each month, a true copy of all the entries made in the mineral trading register in the preceding month; and
  • making records and minerals available within normal working hours for inspection by an authorised officer.

Mineral import and mineral export permits

Any person intending to import or export any mineral, ore or mineral product is required to obtain a permit from the director of mines.

A holder of an import or export permit is required to submit to import or export returns in the prescribed form. The permits are valid for a period of one year and are limited to the quantities specified on the permit.

Renewal and transfer of mineral licences

What is the regime for the renewal and transfer of mineral licences?

The renewal and transfer of rights relating to exploration, and mining licences is governed by the provisions of the Mines Act and the Mines Regulations. The Mines Regulations provide guidelines for the renewal of a mining right and mineral processing licence, which is a non-mining right under the Mines Act.

An application for renewal of a mining right or mineral processing licence is made as follows:

  • in the case of an exploration licence, six months before expiry of the existing licence;
  • in the case of a mining licence, three months for an artisanal licence, six months before expiry for a small-scale mining licence and one year before expiry in the case of a large-scale mining licence; and
  • renewal of a mineral processing licence must be made one year before the expiry of the licence.

Applications for a renewal of a mining right or mineral processing licence must be made in the prescribed form and submitted to the mining cadastre office.

The process for transferring or assigning a mining right or mineral processing licence is also provided for in the Mines Act and Mine Regulations. The statute considers three means of transfer or assignment. First, the transfer or assignment of a share or shares in a company that holds a mining right or mineral processing licence. Second, the transfer of control of a company that holds a mining right or mineral processing licence and third the transfer of a mining right or mineral processing licence.

An application for consent to transfer control in a company that holds a mining right or the transfer of the mining right (ie, the exploration or mining licence as the case may be) is made in the prescribed form and submitted to the minister for consideration. Transfer of a mining right without first obtaining the consent of the Minister as required by the Mines Act renders such transfer void.

An assignment or transfer can be made at any time during the tenure of the right, but not less than 120 days before the expiry of the licence, and must be accompanied by an application for a mining right (or mineral processing licence) for the prospective assignee or transferee.

Duration of mining rights

What is the typical duration of mining rights?

Mining licences

The period for which a mining licence is granted depends on the category or class of mining to be undertaken The Mines Act prescribes a period not exceeding 25 years for large-scale mining, a period not exceeding 10 years for small-scale mining and a period not exceeding two years for artisanal mining. These mining rights are all subject to renewal. Application for renewal must be made three months before expiry in the case of artisanal mining; six months in the case of small-scale mining and one year before expiry in the case of large-scale mining.

Exploration licences

The Mines Act provides that an exploration licence shall be valid for an initial period of four years and can be renewed an additional two times for a period not exceeding three years each. Further, the holder of an exploration licence must relinquish 50 per cent of the exploration area at each renewal. The maximum duration of an exploration licence from initial grant is 10 years. However, an exploration licence for small-scale exploration and gemstones, other than diamonds is non-renewable. Mining rights can be extended or renewed if following consideration of the extension or renewal application by the Licensing Committee, the mining right holder has complied with the conditions attached to the licence and to the provisions of the Mines Act in general.

The Mines Act gives authority to the Director of Mines Safety or Director of Mines to suspend production or close a mine, and similarly to the Licencing Committee to suspend or revoke a mining licence.

The Director of Mines Safety or Director of Mines may direct a mining licence older to suspend or curtail production or close the mine or a section of the mine for any of the following reasons:

  • contravention of a condition of the mining right that presents danger or imminent harm to persons within the exploration, or mining area;
  • an unsafe working environment;
  • uncontrollable pollution of the area resulting from the mining operations;
  • force majeure;
  • a labour dispute that disrupts the mining operations;
  • if a licence holder obtained the mining right by fraud or submission of false information or statements;
  • if a licence holder contravenes a provision in the Mines Act, any other written law relating to the mining right, or any terms and conditions of the mining right;
  • if a licence holder fails to carry out mining in accordance with the approved plan of mining operations and the gross proceeds of sale of minerals from the mining area in any three successive years is less than half of the deemed turnover applicable to the mining licence in each of those years;
  • or fails to pay annual area charges or mineral royalty;
  • if false information is given on the recovery of ores and mineral products, production costs or sale;
  • if a licence holder fails to execute the approved exploration programme in the case of a holder of an exploration licence;
  • if a licence holder has ceased to fulfil the eligibility requirements under the Mines Act; or
  • suspension of revocation is in the public interest.

The Licencing Committee may suspend or revoke a mining right if the holder does any of the following:

  • obtained the right by fraud or submission of false information or statements;
  • contravenes this act, any other written law relating to the right or any terms and conditions of the right;
  • fails to carry out mining operations in accordance with the approved plan of mining operations and the gross proceeds of sale of minerals from the mining area in any three successive years is less than half of the deemed turnover applicable to the mining licence in each of those years;
  • give false information on the recovery of ores and mineral products, production costs or sale;
  • fail to pay annual area charges;
  • fails to excuse the approved exploration programme, in the case of a holder of an exploration licence;
  • has ceased to fulfil the eligibility requirements under the Mines Act; or
  • the suspension or revocation is in the public interest.

Acquisition by domestic parties versus acquisition by foreign parties

Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?

As stated in question 10, artisanal mining is only permitted to be undertaken by a Zambian citizen or a cooperative wholly composed of Zambian citizens. Small-scale mining may only be undertaken by a citizen-owned, citizen-influenced or citizen-empowered company. Gold panning certificates, which are non-mining rights, are issued to citizens or cooperatives consisting only of Zambian citizens. There are, however, no such restrictions for large-scale mining licences.

Protection of mining rights

How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?

The Mines Act protects mining rights by conferring on the holder exclusive rights to carry on exploration or mining (or both). A licence can only be cancelled or suspended by reasons of default or contravention of a condition of the mining right. Prior to cancellation or suspension, the licence holder must have failed to remedy the default within the time allowed or where the default was not capable of remedy, have failed to offer reasonable compensation.

Further protection is provided by the Zambian Constitution, which stipulates that property of any description can only be compulsorily acquired, under the authority of an act of Parliament that provides for payment of adequate compensation.

In addition, foreign arbitration awards with respect to domestic disputes are freely enforceable in Zambia subject only to a standard or universal list of public policy restrictions. The Arbitration Act, No. 19 of 2000 provides that a foreign arbitration award is enforceable in Zambia. Zambian courts will generally enforce an arbitral award rendered by a recognised arbitral institution as a legal, valid and binding submission to the arbitration in accordance with the rules of such recognised arbitral institution.

Arbitral awards will be enforced by the Zambian courts if rendered by all arbitral institutions rendering an award under the auspices of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (the New York Convention) including the London Court of International Arbitration, the International Chamber of Commerce, the Arbitration Association (Southern Africa) and the Arbitration Foundation of Southern Africa.

Although Zambian courts are able to enforce arbitral awards as stated above, the said awards can be challenged on the basis of the following grounds:

  • if the party to the arbitration award was under some incapacity or the arbitration agreement is not valid;
  • if the party challenging the arbitration was not given proper notice of the appointment of the arbitrator;
  • if the arbitration deals with a dispute not contemplated by, or not falling within the terms of the submission to arbitration;
  • if the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties;
  • if the award has not yet become binding on the parties;
  • if the subject matter of the dispute is not capable of settlement by arbitration under the law of Zambia;
  • if the award is in conflict with public policy; and
  • if the making of the award was induced or effected by fraud, corruption or misrepresentation.

Surface rights

What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests?

Surface rights are governed by the Lands Act, Chapter 184 of the Laws of Zambia (the Lands Act). There are two types of land tenure systems in Zambia: customary tenure and state tenure. Customary tenure comprises over 90 per cent of the total land mass. The customary land is administered by traditional rulers in various parts of the country. Mining right holders can obtain the exclusive or other use of the whole or any portion of an exploration or mining area.

The process for acquisition of customary land begins with its conversion to leasehold tenure. To obtain a conversion of customary area the following process is normally followed:

  • the preparation of a plan showing the exact extent of the land to be converted;
  • an application to the chief of the area for conversion of such area into a leasehold tenure and the approval of the chief;
  • upon the consent of the chief, the chief shall refer the application to the local council where the land is situated;
  • the local council is required to consider if there is any conflict between the customary law of the area and the Lands Act, and in the event that there is no conflict make a recommendation to the commissioner of lands; and
  • the commissioner of lands may accept or refuse to accept the recommendation and the applicant has a right of appeal in the event of a refusal to the Lands Tribunal.

Title to land is allocated for a period of 99 years, renewable if the covenants subject to which it was granted have not been breached. The Republican President may grant land title for a longer duration if this is considered to be in the interest of the nation. Any person who desires to sell, transfer or assign land is required to obtain the president’s consent before such land can be disposed of. Consent must be granted within 45 days and is deemed granted thereafter if not refused. Reasons for refusal must be given. An aggrieved party has the right to appeal against the decision to refuse to grant consent to the Lands Tribunal established under the Lands Act.

In instances where private leasehold interests exist in an area covered by a mining right, the holder of any licence or permit who requires the exclusive or other use of any portion of the exploration or mining area may acquire a lease over such area or the right of use thereof on terms to be agreed between the licence holder and the owner of such land. There is an arbitration process to determine the matter (largely in respect of compensation), but the owner or occupier cannot prevent the mine from operating on such land. If any portion of the land over which the tenement exists is under customary land, there may be a requirement to obtain permission from the local chief in order to obtain surface rights that would require the chief to give his or her written consent to the local council for the conversion of that particular portion of customary tenure to statutory (leasehold) tenure.

If a mining right predates any surface right over the same location, it is not technically possible for surface rights independent of the mining rights to be acquired subsequently.

The Mines Act provides that the surface rights holder has to give written consent to a holder of a mining right to exercise any rights over their land. In instances when written consent is required, it should not be unreasonably withheld. A surface rights holder may opt not to give consent with good reason or request the director of mining cadastre to determine any dispute arising with the holder of the mining right in relation to the use of the land. Alternatively, the director of mining cadastre may require the parties to submit to arbitration.

Participation of government and state agencies

Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?

The mining industry is private sector driven since the privatisation of the mining sector and liberalisation of the Zambian economy and therefore the government does not necessarily have a right to participate in a mining project. However, the law permits the government to identify an area that is not subject to existing mining rights in relation to which the director of geological survey may carry out exploration activities on behalf of the government.

The Mines Act provides that the government may acquire mining rights for government over identified areas. The identified areas will not be subject to an application for a mining right by any person and furthermore the mining rights subject to identified areas shall be granted to a government investment company in accordance with the provisions of the Mines Act.

In addition, the Public-Private Partnership Act No. 14 of 2009 (the PPP Act) provides for the implementation of public-private partnership agreements between contracting authorities and concessionaires although these are mainly related to infrastructure projects. The PPP Act enables the government and government agencies to partner with the private sector on projects that develop public infrastructure and contribute to effective delivery of social services. This may be more visible particularly when it relates to projects dealing with sustainability.

There are no mandatory listing requirements with respect to the project company.

Government expropriation of licences

Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?

There are no specific legal provisions relating to expropriation of mining licences. Article 16(1) of the Constitution of Zambia and Chapter 1 of the Laws of Zambia provides for the protection of fundamental rights, which include the ownership and protection of property rights. Mining rights as defined under the Mines Act would qualify as rights to property protected by the Constitution. Expropriation of property can only be by an act of Parliament, which provides for payment of adequate compensation for the property or interest or right to be taken possession of or acquired. The Constitution further provides that nothing contained in or done under the authority of any law shall be held to be inconsistent with or in contravention of the protection of the fundamental rights, to the ownership and protection of property rights to the extent that it is shown that such law provides for the taking possession or acquisition of any property or interest therein or right thereof where the property consists of or includes any licence or permit.

Any relevant act must provide that in default of agreement, the amount of compensation shall be determined by a court of competent jurisdiction. The only other provision that deals with acquisition of property in general terms is section 3 of the Land Acquisitions Act, chapter 189, which gives the President of Zambia power to acquire property of any description where they consider it desirable or expedient in the interests of the republic to do so compulsorily. Section 10 of the same act further provides for the monetary compensation where any property is acquired by the President under the act. There has, however, been much debate as to what would constitute property and whether the act ought to be applied strictly to land acquisition or property in any form.

Protected areas

Are any areas designated as protected areas within your jurisdiction and which are off-limits or specially regulated?

The Mines Act provides that the holder of a mining right or mineral processing licence requires written consent of the appropriate authority to commence activity upon any land dedicated as a place for burial, a place being an ancient or national monument, any land within 90 metres of any building or dam owned by the republic or any land forming part of the government aerodrome.

There are generally no protected areas in Zambia specified as being off-limits for mining purposes apart from those areas declared as heritage sites under the law.

Duties, royalties and taxes

Duties, royalties and taxes payable by private parties

What duties, royalties and taxes are payable by private parties carrying on mining activities? Are these revenue-based or profit-based?

The following duties, royalties and taxes are payable by private parties carrying on mining activities, each of which (with the exception of royalties and value added tax) are profit-based.

Corporate income tax

As detailed in the Income Tax Act, Zambia has a source based system for the taxation of income. Income from a source deemed to be a Zambian source is subject to income tax. Corporate income tax (CIT) on mining companies is charged as follows:

  • income from mineral processing carried out under a Mineral Processing Licence is taxed at the rate of 35 per cent;
  • income from mining operations, at the rate of 30 per cent per annum.

Exploration operations are not included under the definition of mining operations and, therefore, the above-mentioned CIT will not apply to a holder of a large-scale exploration licence, provided that they do not undertake any mining operations. Notwithstanding this, however, a holder of an exploration licence will be required to submit annual CIT returns.

To date, the rates of CIT indicated are correct as a result of negotiations between mining companies and the government.

Variable profit tax

Variable profit tax is payable on income earned from mining operations at 15 per cent when taxable income exceeds 8 per cent on the gross sales.

Royalties

Mineral

Royalty payable

Copper

4 per cent when the norm price is less than US$4,500 per tonne 5 per cent when the norm price is US$4,500 per tonne or more but less than US$6,000 per tonne; and 6 per cent when the norm price is US$6,000 per tonne or more

Base metals (other than copper)

5 per cent of the norm value

Precious metals

6 per cent of the norm value

Gemstones

6 per cent of the gross value

Energy minerals

5 per cent of the gross value

Industrial minerals

5 per cent of the gross value

Norm value is defined by the Mines Act as:

  • the monthly average London Metal Exchange cash price per tonne of the metal or recoverable metal sold;
  • the monthly average Metal Bulletin cash price per tonne of metal or recoverable metal sold to the extent that it is not quoted on the London Metal exchange; or
  • the monthly average cash price per tonne at any exchange market approved by the Commissioner-General (the Commissioner General) of the Zambia Revenue Authority (ZRA) of metal sold or recoverable metal sold to the extent that it is not sold on the London Metal Exchange or Metal Bulletin.

The gross value is defined as the realised price for a sale (free on board) at the point of export from Zambia or point of delivery within Zambia.

Duties and value added tax

During the construction and production phase, mines usually purchase machinery that is imported. Import duties (at a rate of up to 25 per cent) and VAT (at 16 per cent) are levied on these goods. ZRA has the discretion to grant tax relief to the mines in the form of various allowances, deductions and write-offs, such that mining entities defer the taxation to a later year when they are in a better financial position to pay. Export of goods from Zambia is considered to be a zero-rated supply if requisite evidence of exportation is produced.

Withholding tax

Tax required to be deducted from any dividend shall be deducted at the rate of zero per cent per annum for any dividend paid by a company carrying on mining operations. Withholding tax applies at the following rates in respect of other payments:

  • dividend payouts and profits distribution by branches of foreign companies at 15 per cent;
  • construction and haulage operations fees paid out to non-residents at 20 per cent;
  • interest at 15 per cent;
  • commission and entertainment fees paid out to non-residents and management and consultancy fees paid out to non-residents at 20 per cent; and
  • management and consultancy services paid out to resident consultants at 15 per cent.

Tax advantages and incentives

What tax advantages and incentives are available to private parties carrying on mining activities?

Whereas the normal CIT rate is 35 per cent, mining companies are taxed for CIT purposes at 30 per cent. In addition, withholding tax on dividends paid by mining companies is zero per cent whereas it is generally 15 per cent for other companies.

US dollar accounting

Mining companies may be allowed to maintain account books in US dollars in accordance with generally accepted accounting principles if the Commissioner-General is satisfied that not less than 75 per cent of the gross income is earned in the form of foreign exchange from outside Zambia.

Prospecting expenditure deductions

All prospecting expenditure incurred in a charge year is allowed as a deduction.

Mining expenditure deductions

A deduction is allowed in respect of the capital expenditure incurred on a mine that is in regular production in the charge year.

Deductions for mining expenditure on non-producing and non-contiguous mines

For a person carrying on mining operations in a mine that is in regular production and who is also the owner of, or has the right to work a mine that is not contiguous with the producing mine and from which the person has made a loss in the charge year, the amount of such loss shall not be deducted in ascertaining the gains or profits from his or her mining operations provided that such loss may be allowed as a deduction in ascertaining the gains or profits arising from the same mine when it commences regular production.

Capital allowance

Capital allowances are deducted in ascertaining the gains or profits of a business for each charge year at the rate of 25 per cent.

Carry-forward loss

Losses may be carried forward for a period not exceeding 10 years. The tax losses carried forward for one charge year is limited to 50 per cent of taxable profits.

Customs duty on imports of mining equipment

The holder of a mining right is entitled to exemption from customs and excise duties, and from any other duty or impost levied under the Customs and Excise Act, in respect of all machinery and equipment (including specialised motor vehicles) required for any of the activities carried on or to be carried on in pursuance of the right or otherwise for the purposes of his or her investment in mining or prospecting or exploration.

Royalty deferment

This option is available under the Mines Act, in that the Commissioner-General may, on application by the holder of the mining right, defer payment of royalty due from the holder if, during any period for which a payment of royalty is due the cash operating margin of the holder in respect of mining operations in the mining area falls below zero.

Tax stablisation

Does any legislation provide for tax stabilisation or are there tax stabilisation agreements in force?

There is currently no legislation providing for tax stabilisation agreements or clauses. However, the Zambian government has been known to enter into concession agreements with individual mining companies in which stabilisation clauses have been included. In the event that there is a tax dispute between mining entities and the government, the mining entities can lobby the government, who will then consider their concerns.

Carried interest

Is the government entitled to a carried interest, or a free carried interest in mining projects?

The government is not entitled to a carried interest or a free carried interest in mining projects. The government plays more of a regulatory role, but has no direct participation in terms of the direction of mining operations or shareholding in mining right holders.

Transfer taxes and capital gains

Are there any transfer taxes or capital gains imposed regarding the transfer of licences?

Property transfer tax (PTT) is payable on the transfer of any type of mining right from one party to another. Any mining right under the Mines Act is considered to be property and the Property Transfer Tax (Amendment) Act No. 16 of 2015 provides that PTT of 10 per cent of the realised value, which is the value of a good sold on the open market, in respect of a mining right or an interest in the mining right, shall be payable on the transfer, assignment, encumbrance or other dealing involving a mining right or mining interest.

Distinction between domestic parties and foreign parties

Is there any distinction between the duties, royalties and taxes payable by domestic parties and those payable by foreign parties?

There is no distinction between duties or royalties for domestic and foreign parties.

Business structures

Principal business structures

What are the principal business structures used by private parties carrying on mining activities?

The main business structures used by private parties are private limited companies incorporated under the Companies Act. Foreign entities may also utilise joint ventures, subsidiaries or branches to conduct mining activities in Zambia. Where joint ventures are used, however, the most appropriate structure is an incorporated rather than an unincorporated structure. This is because an unincorporated entity cannot hold a mining right under Zambian law.

Local entity requirement

Is there a requirement that a local entity be a party to the transaction?

The law in Zambia does not prescribe business structures requiring a local entity to be a party.

Bilateral investment and tax treaties

Are there jurisdictions with favourable bilateral investment treaties or tax treaties with your jurisdiction through which foreign entities will commonly structure their operations in your jurisdiction?

Zambia has tax treaties with the following countries, although Mauritius is the most commonly used tax haven for tax-structuring purposes in relation to projects based in Zambia:

Country

Effective date of convention

Country

Effective date of convention

France

14 December 1950

Finland

3 November 1978

Sweden

28 May 1958

India

5 June 1981

Switzerland

30 May 1961

South Africa

14 May 2014

Tanzania

2 March 1968

Mauritius

30 June 2015

Uganda

24 August 1968

United Kingdom

30 June 2015

Kenya

27 August 1968

Seychelles

29 December 2015

Japan

19 February 1970

Botswana

14 June 2016

Italy

27 October 1972

Ireland

29 December 2017

Germany

13 May 1973

Morocco

2 February 2018

Norway

22 July 1973

China

3 April 2018

Denmark

13 September 1973

Netherlands

16 May 2018

Bilateral investment treaties

Zambia has currently entered into a total of 13 bilateral investment treaties (BITs). The most notable of these include China (1996), Germany (1996), the Belgium-Luxembourg Economic Union (2001), France (2002), the Netherlands (2003) and the United Kingdom (2009). These treaties contain favourable investor protection provisions such as provisions against expropriation. However, not all the BITs are currently in force.

Financing

Principal sources of financing

What are the principal sources of financing available to private parties carrying on mining activities? What role does the domestic public securities market play in financing the mining industry?

The principal sources of funding available to small-scale mining parties are local banks, macro-finance agencies and the government. Large-scale mining parties may principally source their funds from local and international commercial and development banks. The public securities market plays a limited role in financing the Zambian mining industry with only two mining companies currently listed on the stock exchange.

Direct financing from government or major pension funds

Does the government, its agencies or major pension funds provide direct financing to mining projects?

The government does not currently provide any direct financing to mining projects.

Security regime

Describe the regime for taking security over mining interests.

Under Zambian law, there is no fixed regime for taking security over mining rights. Security may be taken over any mining right by mortgage, pledge or by any other means used to obtain security over property, however, there is a requirement that the approval of any encumbrance, assignment or transfer of a mining right under the Mines Act is obtained from the Minister.

Restrictions

Importation restrictions

What restrictions are imposed on the importation of machinery and equipment or services required in connection with exploration and extraction?

There are no restrictions pertaining to the importation of machinery and equipment to be used in connection with mining activities.

Standard conditions and agreements

Which standard conditions and agreements covering equipment supplies are used in your jurisdiction?

There are no specific standard conditions and agreements prescribed under the law in Zambia. It is upon the parties entering into equipment supplies contract to decide whether the agreement covering the equipment supply will be subject to any standard conditions. The market therefore is equally friendly to both buyer and seller as their contract will determine their rights and obligations as agreed.

Generally, the parties to these agreements prescribe arbitration as a means of resolving their disputes, although a notable number prefer court proceedings. Court actions are preferred for actions to recover the equipment supplied whilst arbitration is preferred for actions for the price.

In terms of standards for the actual equipment supplied, the Zambia Bureau of Standards (ZABS), the statutory national standards body for Zambia established under the Standards Act, No. 4 of 2017 and the recently created Zambia Compulsory Standards Agency under the Compulsory Standards No. 3 of 2017, implement compulsory standards through import and export inspections. ZABS and the Compulsory Standards Agency serve the country in the field of standardisation, standards formulation, quality control, quality assurance, import and export quality inspections, certification and removal of technical barriers to trade. Therefore, any equipment supplied must conform to the standards set by ZABS, regardless of whether they are locally sourced or from outside the country.

Mineral restrictions

What restrictions are imposed on the processing, export or sale of minerals? Are there any export quotas, licensing or other mechanisms that prevent producers from freely exporting their production?

A person who is not a holder of a large-scale mining licence or a small-scale mining licence cannot process minerals without a mineral processing licence that is issued by the Director of Geological Survey.

It is prohibited for a person who does not have a mining licence to trade in minerals without a mineral trading permit issued upon application to the Director of Mines.

A person or company cannot import or export through the republic any mineral ore or mineral product without a mineral import and mineral export permit issued by the Director of Mines.

Import of funds restrictions

What restrictions are imposed on the import of funds for exploration and extraction or the use of the proceeds from the export or sale of minerals?

There are no restrictions on the importation of funds to finance mining activities or use of the proceeds from the export or sale of minerals.

Environment

Principal applicable environmental laws

What are the principal environmental laws applicable to the mining industry? What are the principal regulatory bodies that administer those laws?

The principal environmental health and safety laws applicable to the mining industry are the Environmental Act, the Occupational Health and Safety Act No. 36 of 2010, the Mines and Minerals (Environmental) Regulations No. 29 of 1997 and the Environmental Protection and Pollution Control (Environmental Impact Assessment) Regulations SI No. 28 of 1997 (EIA Regulations).

The principal regulatory bodies responsible for administration of the environmental, health and safety protection regulatory framework are ZEMA, the Ministry (Mines Safety Department) and the Occupational Health and Safety Institute.

Environmental review and permitting process

What is the environmental review and permitting process for a mining project? How long does it normally take to obtain the necessary permits?

The EIA Regulations specify that any person who, or entity that, proposes to undertake a new project which under the EIA Regulations requires an environmental impact assessment (EIA) to be undertaken must have an EIA conducted before the commencement of the project. The EIA Regulations provide that mining operations require an EIA to be undertaken. The nature of the project will determine whether the developer should prepare an environmental project brief (EPB) or an environmental impact statement. The EPB should set out the objectives and nature of the project, the main activities to be undertaken before, during and after the commencement of the project, the socio-economic impact of the project on the people that will be affected, and also the perceived socio-economic impact of the particular project on the environment, following the procedures set out in the EIA Regulations.

Where an EPB is submitted, it is considered by the ZEMA, which determines whether the project is likely to have a significant impact on the environment, and shall, within 40 days of receiving the EPB, approve it if satisfied that there will be no significant impact on the environment or that the EPB discloses sufficient mitigation measures to ensure the acceptability of the anticipated impact. If ZEMA determines that the project is likely to have a significant impact on the environment, it will require the developer to prepare an EIS. ZEMA shall assess the EIS in accordance with the procedures in the EIA Regulations and eventually issue a decision stating that the project is approved, rejected or approved subject to the developer meeting certain conditions.

The process of obtaining the approval of the mining project can take between six weeks and several months owing to the time required for public hearings and the relevant notifications and waiting periods related thereto.

Closure and remediation process

What is the closure and remediation process for a mining project? What performance bonds, guarantees and other financial assurances are required?

The closure procedure of a mining project is fully set out in the Mines and Minerals (Environmental) Regulations (the Regulations). Under the Regulations, closure of a mine can only occur where the applicant has applied to the Director of Mines safety for a partial or complete closure of a mine. The application must include an audit report on the environment surrounding the mine site prepared by an independent person.

A mine site should stand closed within 60 days of an application. Once all the conditions of closure under the Regulations have been met, the Director of Mines safety is required to issue a closure certificate for any mine closed and the mining right or permit or part thereof is to be cancelled by the Minister.

The Mines and Minerals (Environmental Protection Fund) Regulations provide for refunds to holders of licences, on application, when a mine site is closed. In accordance with the act, this amount would be less any monies owing. The Director of Mines Safety may use any part of the contribution to the fund of a licence holder for the purposes of rehabilitating the site.

Restrictions on building tailings or waste dams

What are the restrictions for building tailings or waste dams?

One requires a licence from ZEMA as provided under the Environmental Management (Licensing Regulations) 2013 before building tailings or waste dams. The site upon which a dam is constructed should be solid ground. In the case of tailings the Department of Mines Safety under the Ministry of Mines would not approve construction near wetlands to avoid contamination of surface and underground water bodies in an area. There are no specific professional qualifications required for the professionals in charge and management of the dam waste. The facilities are routinely inspected by the Department of Mine Safety. The installation of an alarm is mandatory to prevent unauthorised entry to the dam site. Dams are supposed to be constructed away from human settlement. In case of an emergency, there are drills; however, these are mainly for staff members. There are also mandatory reporting obligations in the case of an accident. However, there are no expressly stated responsibilities to rescue people in case of a dam failure.

Health & safety, and labour issues

Principal health and safety, and labour laws

What are the principal health and safety and labour laws applicable to the mining industry? What are the principal regulatory bodies that administer those laws?

The main health and safety and labour laws applicable to the mining industry include:

Health and safety and labour laws

Administering authority

Mines and Minerals Development Act

Ministry of Mines and Mineral Development

Factories Act

Inspector of Factories

Environmental Management Act

Zambia Environmental Management Agency

Public Health Act

Inspector

Food and Drugs Act

Health Inspector

Ionising Radiation Protection Act

Radiation Protection Authority

Workers’ Compensation Act

Workers’ Compensation Commission

Energy Regulation Act

Ministry of Energy and the Energy Regulation Board

Industrial and Labour Relations Act

Labour Commissioner

Employment Act

Labour Commissioner

Occupational Health and Safety Act

Occupational Health and Safety Institute

Management and recycling of mining waste

What are the rules related to management and recycling of mining waste products? Who has title and the right to explore and exploit mining waste products in tailings ponds and waste piles?

Rules and regulations related to the management of waste are provided for by the Environmental Management Act No. 12 of 2011. The act imposes the following obligations in relation to waste management:

  • a person shall not collect, transport, sort, recover, treat, store, dispose of, or otherwise manage waste in a manner that results in an adverse effect, or creates a significant risk of an adverse effect occurring;
  • a person who produces, collects, recovers, transports, keeps, treats or disposes of waste shall take all reasonable measures to prevent any other person from using waste in a manner that causes an adverse effect on the environment; and
  • a person shall not dispose of waste in such a manner that it causes litter.

ZEMA may, upon application, issue a waste management licence that permits the holder to conduct the following activities:

  • reclaim, re-use, recover or recycle waste;
  • collect and dispose of waste from industrial, commercial, domestic or community activities;
  • transport waste to a disposal site;
  • own, construct or operate a waste disposal site or other facility for the permanent disposal or storage of waste; and
  • transit, trade in or export waste.

The holder of such a licence therefore has the right to explore and exploit waste products.

Further, under the Mines Act the term ‘mineral’ is defined to include ‘any substance occurring in tailing dams, slag dumps, waste rock dumps, residue waste rock dumps, residue stockpiles or residue deposit’. A person who wishes to explore and exploit minerals from tailing dams and other waste piles for commercial purposes is required to obtain a mining licence or a mineral processing licence from the Ministry of Mines.

The Mines and Minerals Development Act further provides that a holder of a mining licence is required to undertake the management of the environment in the mining area for which a licence has been granted, which includes waste management. The holder of a mining licence therefore has the right to explore and exploit mining waste that is produced as a result of the mining activities carried out pursuant to the licence granted.

Use of domestic and foreign employees

What restrictions and limitations are imposed on the use of domestic and foreign employees in connection with mining activities?

Companies carrying out mining operations are legally obliged under the Mines Act to give preference to the employment of citizens with relevant qualifications or skills and train citizens of Zambia for the transfer of technical managerial skills. Immigration rules require a party seeking to recruit foreign employees to justify such recruitment prior to the grant of immigration permits.

Social and community issues

Community engagement and CSR

What are the principal community engagement or CSR laws applicable to the mining industry? What are the principal regulatory bodies that administer those laws?

There are no CSR laws applicable. However, some of the conditions attached to mining rights are that holders must employ and train Zambians and promote local business development.

Rights of aboriginal, indigenous or disadvantaged peoples

How do the rights of aboriginal, indigenous or currently or previously disadvantaged peoples affect the acquisition or exercise of mining rights?

Not applicable.

International law

What international treaties, conventions or protocols relating to CSR issues are applicable in your jurisdiction?

Not applicable.

Anti-bribery and corrupt practices

Local legislation

Describe any local legislation governing anti-bribery and corrupt practices.

The Anti-Corruption Act No. 3 of 2012 (the ACC Act)

The ACC Act provides for the prevention, detection, investigation, prosecution and punishment of corrupt practices and related offences in public offices. The act further defines offences based on the rule of law for the promotion of transparency, accountability and management of public affairs and property.

The Public Procurement Act No. 12 of 2008

The Public Procurement Act revises the law relating to procurement so as to ensure transparency and accountability in public procurement, as well as regulating and controlling practices related thereto.

The Financial Intelligence Centre Act No. 46 of 2010

This act creates the Financial Intelligence Centre, which is tasked with, inter alia, receiving, requesting, analysing and disseminating the disclosure of suspicious transaction reports. Suspicious transaction reports are defined as reports submitted on suspected or attempted money laundering, financing of terrorism or other serious offences.

The Prohibition and Prevention of Money Laundering Act 2001, as amended by the Prohibition and Prevention of Money Laundering (Amendment Act No. 44 of 2010)

This act provides for the constitution of the Anti-Money Laundering Authority and the Anti-Money Laundering Investigations Unit. The act also provides for the forfeiture of property of persons convicted of money laundering and the cooperation of international organisations in the investigations, prosecution and other legal processes related to money laundering.

Foreign legislation

Do companies in your country pay particular attention to any foreign legislation governing anti-bribery and foreign corrupt practices in your jurisdiction?

Generally, Zambian law firms would not advise clients on foreign legislation, however, companies with a connection to the US or the UK (eg, incorporated company or parent company, share listings, employees and employers in either or both jurisdiction) are advised to take cognizance of the UK Bribery Act of 2010 and the US Foreign Corrupt Practices Act (FCPA).

The UK Bribery Act prohibits paying bribes to any foreign public official with the intention of influencing the official, or to obtain or retain a business advantage, if the official is not permitted or required by law to be so influenced.

A foreign public official includes:

  • anyone who holds a foreign legislative, administrative or judicial position;
  • anyone who exercises a public function for a foreign country, territory, public agency or enterprise; and
  • any official or agent of a public organisation (eg, UN or the World Bank).

The UK Bribery Act provides broad authority to prosecute individuals and commercial organisations for conduct outside the UK.

Offences that occur in the UK are covered, in which case the nationality or place of incorporation is irrelevant. Even if no act occurs in the UK, there will still be liability if the person has a close connection with the UK (ie, UK citizen or resident or UK-incorporated company, among others).

This captures the activities of UK-incorporated entities abroad (eg, in Zambia). It also captures foreign nationals who commit bribery abroad, if they are also residents of the UK. Corporate offences include failure to prevent bribery and are extended to commercial organisations incorporated in the UK, or any other body corporate that carries on all or part of its business in the UK and any partnerships that carry on all or part of their business in the UK.

The FCPA’s anti-bribery provisions prohibit US persons and companies from paying bribes or providing anything else of value to ‘foreign officials’ in order to obtain or retain business, or to secure an improper business advantage. The FCPA only covers public bribery (ie, government officials), although commercial bribery may be covered by other laws. Officers, directors, employees, agents, distributors and shareholders acting on behalf of a corporate entity may subject it to liability. The anti-bribery provisions apply to the following:

  • US persons and companies;
  • non-US companies that have listed US securities or are Security and Exchange Commission-reporting companies; and
  • anyone acting in the territory of the US.

Zambia has also ratified the United Nations Convention against Corruption as well as the African Union Convention on Preventing and Combating Corruption, which require Zambia to establish a wide range of criminal offences for both public and private sector entities in the event of corruption.

Disclosure of payments by resource companies

Has your jurisdiction enacted legislation or adopted international best practices regarding disclosure of payments by resource companies to government entities in accordance with the Extractive Industries Transparency Initiative (EITI) Standard?

Since becoming fully compliant with the EITI in 2012, Zambia has recorded increases in revenue, according to the Ministry of Mines. This is attributed to the increase in the number of tax haven-based management firms.

There is, however, no legislation requiring disclosure of payments by resource companies to government entities. The government is nonetheless considering the enactment of an EITI Act.

Foreign investment

Foreign ownership restrictions

Are there any foreign ownership restrictions in your jurisdiction relevant to the mining industry?

Under the Mines Act, foreign ownership of mining rights is not strictly prohibited. However, there is a requirement that a foreign national or foreign entity would be required to incorporate a company under the Companies Act. Foreign entities usually use joint ventures, and subsidiaries to conduct mining activities in Zambia. Further, there is a restriction on persons who are not Zambian citizens or companies that are not owned by Zambian citizens with regard to prospecting permits, small-scale mining licences, small-scale gemstone licences and an artisanal mining right, as discussed above.

International treaties

Applicable international treaties

What international treaties apply to the mining industry or an investment in the mining industry?

Zambia is a signatory to several international treaties and conventions; most of these treaties, however, are not directly related to the mining industry.

Zambia is a signatory to the International Convention on the Settlement of Investment Disputes. Zambia is also a member of the International Monetary Fund and World Bank and follows the investment guidelines and conditions issued by these organisations.

The Zambian government has signed several investor protection agreements with other governments. The signing of these agreements gives rise to the protection of nationals of these countries and can facilitate the implementation of rights under the Investment Dispute Convention Act, which incorporates the International Convention on the Settlement of Investment Disputes.

Update and trends

Update and trends

What were the biggest mining news events over the past year in your jurisdiction and what were the implications? What are the current trends and developments in 2017 in your jurisdiction's mining industry (legislation, major cases, significant transactions)?

The Property Transfer Tax (Amendment) Act 2017 (the PTT Act 2017) introduces a charge on the transfer of a share issued by a company incorporated outside Zambia that owns at least 10 per cent of the shares in a company incorporated in Zambia, and provides that the Zambian subsidiary shall incur PTT charges. The PTT Act 2017 further provides that the realised value for a mining right or interest in a mining right to which the PTT is chargeable shall be the actual price of the mining right or interest in the mining right or as determined by the Commissioner-General, whichever is higher.