Investment protection in the mining sector - A guide to protecting foreign investments in Zambia

This article is the latest in our series looking at investment protection in the mining sector across Africa. In this edition, we focus on the protection of investments in the mining sector in Zambia.

The previous editions in our series, which focused on the OHADA Zone and Tanzania, contained a helpful checklist, prepared with mining investors in mind, on how to make sure investments are protected and what to do in the event that a dispute arises. They can be viewed here: Investment protection in the mining sector: A guide to protecting foreign investments in the OHADA Zone and here: Investment protection in the mining sector: A guide to protecting foreign investments in Tanzania. This checklist applies equally to investments in Zambia and should be studied closely whether at the outset or during the pendency of an investment.


In February 2024, the President of Zambia, Hakainde Hichilema, referred to a project to connect copper mines in Zambia to an Angolan port as being a “once-in-a-lifetime” opportunity.  The U.S.-backed plan, which has support from the European Union (EU) and the G7, will link mining operations by building new track in Zambia and connecting it to an existing railway in Angola.

In October 2023, the EU also agreed to a partnership with the Democratic Republic of Congo and Zambia to develop critical raw material value chains and improve rail transport connections. These projects will likely create greater exporting possibilities for minerals and metals in Zambia by cutting transit times by weeks and improving value chains. 

As energy transition-related metals and minerals increase in their strategic importance, an influx of foreign investment in the Zambian mining sector may be expected. Mining already is the largest source of income for the country, which has a broad range of deposits of metals and minerals. In particular, Zambia is a major copper producer. It is well-positioned to take centre stage in relation to green energy since the European Commission has designated copper as a critical mineral in the Critical Raw Minerals Act, which was formally adopted by the European Council on 18 March 2024.

According to President Hichilema, Zambia aims to more than treble the country’s copper production to more than three million tonnes per year by 2032. The government has reported its intention to work alongside foreign investors as part of delivering on this target. This has created hope among investors of a move away from repeated threats of resource nationalism.

Even as the investor picture brightens, it is critically important that foreign investors take steps to ensure that their investments have the strongest possible protection. Mining is a capital-intensive process with long-term profit horizons. A lot can change in the course of a project, and political risk remains high on the agenda for foreign investors. 

Zambia’s network of bilateral investment treaties

The first point to consider in relation to investment protection is treaty availability. Is there an investment treaty in force between Zambia and the home state of the investor? Zambia has a relatively small number of in-force bilateral investment treaties (BIT). However, there are BITs in force between Zambia and: (a) Mauritius, a tax-efficient jurisdiction commonly used for foreign investments into Africa; and (b) the Netherlands, a jurisdiction also commonly used for foreign investments.

Investors can be entitled to protection under a BIT by either structuring the ownership of their investment through a state that has a BIT with Zambia at the outset of the investment, or by re-structuring an existing investment to bring a company incorporated in a relevant state into the ownership structure, provided that a dispute has not arisen or is reasonably foreseeable. Often this type of investment structuring can be done using holding companies that indirectly have an ownership interest in the relevant investment. While corporate and tax considerations ordinarily will be the main driver behind the structuring of an investment, inserting a company incorporated in a state with a BIT with Zambia may not only be complementary to such aims, but also will serve to address political risk.

Previous investment arbitrations against Zambia relating to the mining sector

Zambia has been respondent in one known investment arbitration in the mining sector. In June 2020, Kansanshi Mining Plc (Kansanshi) initiated a contract-based ICSID arbitration against Zambia which reportedly related to two open pit copper-gold mines near Solwezi, in north-western Zambia. 

The case was reported to concern allegations of breaches of a development agreement in relation to Kansanshi’s operations of the mines, and it formed part of a wider network of disputes with the Zambian state-owned mining company ZCCM-IH. This arbitration was discontinued in September 2023 following settlement of the various disputes between the parties.

Regulatory developments in Zambia

In 2017, the Zambia Revenue Authority initiated a mining industry tax audit, which resulted in significant tax demands being made of foreign investors. In 2018, the Government introduced numerus fiscal reforms, which added import duty on concentrates, increased royalties (while also making them no longer tax deductible) and replaced VAT with a non-refundable sales tax (at a time when mining companies were reported to be owed USD600 million in VAT refunds – these refunds were not paid).

The recent developments in Zambia summarised above suggest a move away from previous well-reported overtures of resource nationalism. However, election cycles can drive resource nationalism, and with a presidential election scheduled for 2026, investors should not rest on their laurels in seeking to protect their long-term investments. 

A further challenge facing investors is the high tax regime in Zambia, where certain mining companies have commented that the tax rates are among the highest in the world. One of the ways in which states can interfere with foreign investments in the mining sector is through onerous changes to royalty or tax regimes. As noted above, Zambia seems to have taken this approach in 2017 and 2018. Such measures often may be taken by governments newly in office, seeking to readjust the balance of mining revenues more in favour of the state.  However, such arrangements can also seriously affect the financial viability of an investment and may frustrate the legitimate expectations of investors.

What should investors do?

Zambia is likely to be a key market for investors in the mining sector as the energy transition gathers pace. Investors, both existing and new, should be mindful of the political risk which often goes hand-in-hand with a significant investment in the mining sector. 

They should ensure that their investments are entitled to protection. Investors should then vigilantly monitor regulatory developments related to the Zambian mining sector in general, in addition to their own dealings with the Government or state authorities.

If state interference with their investment should incur, investors should consider utilising the protections set out in a BIT. While this ultimately be achieved by bringing a claim against Zambia before an international tribunal, the protections set out in BITs may also effectively be used as a tool for dispute avoidance. The mere availability of protection can be highly influential in discussions and negotiations with Government.

If a dispute cannot be avoided, most investment treaties give investors access to international arbitration against the host state of the investment before an international tribunal without any further consent on the part of the state. Many mining companies have already used third-party funders to fund claims under investment treaties. Third-party funding allows an investor to bring a claim without the fees and costs associated with that claim affecting the investor’s balance sheet or having an impact on its cash flow. The third-party funder funds the investor’s legal fees and costs in return for a portion of the proceeds of any award in the investor’s favour.  This is non-recourse funding: if the investor does not succeed, it does not have to pay the funder. 

If the investor succeeds in an arbitration against a state under an investment treaty, it may be entitled to substantial damages. While many states wish to be perceived as adhering to their international legal obligations and will pay an arbitral award voluntarily, if a state does not pay, it is possible to enforce an award against non-state immune assets of the state held abroad.



Authored by Scott Macpherson, Markus Burgstaller, and Mulopa Ndalameta (MAY & Company) - Our Team - MAY & Co. (


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