Among all African countries, Zambia is especially rich in natural resources and rare minerals. The country's so-called copper belt has very lucrative copper, zinc and cobalt mines that also produce silver as a by-product. In the latter years of the current commodities boom the Zambian government has significantly raised its revenues owing to mining activity. Today almost 70% of Zambia's export revenues depend on the production of important metals.
In Africa, cobalt is mainly produced in the Democratic Republic of Congo and Zambia. This extremely rare metal is in very high demand in the electronics and mobile phone industry. As the political situation in Congo remains very unstable, companies looking to mine cobalt have focused on Zambia instead.
Zambia was one of the highly-indebted countries that embraced the HIPC-Initiative in the 1990s – a request for debt cancellation to the World Bank and the International Monetary Fund (IMF). Many readers may ask how a country with such richness in natural resources could have been trapped in such a dangerous debt spiral. During the last commodity boom in the 1970s, Zambia prospered, but did not invest sufficient capital in exploration efforts. Furthermore, the state-owned mining companies were riddled with corruption – an unfortunate fact of life across Africa.
Large percentages of the profits made from the production of copper, cobalt, selenium, zinc, gold, silver and uranium were siphoned off into the pockets of bureaucrats, politicians and managers of the national mining companies. With the end of the last commodities bull run in the 1980s, the government stopped profiting to the same extent from the production of metals. At the start of the 1970s Zambia was producing 750,000 tonnes of copper a year, but by the end of the last century annual production had dropped to just 200,000 tonnes. Zambia became increasingly dependent on credit from international lenders. The IMF and the World Bank pressured Zambia to privatize its national mining industry, which occurred in 2001. This encouraged global mining companies to seek production licenses from the Zambian authorities.
Mining companies were especially interested in the so-called copper belt, a million year old mountain chain. The Zambian government lacked the capital to invest in exploration, but many private prospectors took the lead. Since 2001 production of copper, zinc and cobalt in the copper belt has reached new record highs. Although today the state only holds a minority stake in the mines it used to fully own, it has been able to significantly raise its revenues through yearly licensing fees and export taxes. Approximately 70% of all Zambian exports, which in 2011 amounted to $9.01 billion, depend on copper and zinc. In 2011 Zambia's economy recorded gains of approximately $22 billion, while yearly economic growth reached 6.7%.
Zambia is one of the world's few cobalt-exporting countries, and the government is highly committed to maintaining political stability. Hopefully, as long as the current situation prevails, Zambia will continue to attract investors interested in mining the country's natural treasures.