Mining 2026

ZAMBIA Law and Practice Contributed by: Harriet Mdala, Natasha Lungu, Samuel Muleya and Chanda Musonda-Chiluba, MAY & Company

Offtake Agreements These are pre-arranged contracts in which a buyer agrees to purchase a portion of the mine’s produc - tion in advance. Offtake agreements often come with upfront payments or financing to support project development. In Zambia, offtake agreements are par - ticularly common for copper and cobalt, with major buyers securing long-term supply contracts to miti - gate market risks. 5.5 Role of Domestic and International Securities Markets in the Financing of Exploration, Development and Mining The domestic securities market in Zambia, led by the Lusaka Securities Exchange (the “LuSE”), pro - vides a regulated platform for raising capital. Despite its potential, the role of the LuSE in financing mining projects is minimal. This is primarily due to the low number of Zambian mining companies listed on the LuSE. Currently, the only mining-related entity listed is ZCCM-IH, which serves as the government’s invest - ment arm in the mining sector. The limited participa - tion of mining companies on the LuSE restricts the domestic market’s contribution to mining finance. It can be said that, currently, the domestic securities markets play little to no role in mining finance. Similarly, the international securities markets play a minimal role in financing exploration, development, and mining activities in Zambia. Although mechanisms like depository receipts have been utilised to access foreign capital, their application is very rare. Deposi - tory receipts, which represent shares in a foreign com - pany and are traded on international stock exchanges, can provide Zambian companies with a pathway to tap into global markets. However, their issuance typi - cally involves significant compliance costs, regulatory hurdles, and the need for a robust corporate structure, making them an uncommon choice for most mining enterprises in Zambia. 5.6 Security Over Mining Tenements and Related Assets Creation of Security Interests Mining tenements Security interests can be created over mining tene - ments under Section 46 of the Minerals Act. A mining right holder may encumber their tenement, provided

Protocol on Finance and Investment. This Protocol aims to promote sustainable investment flows and ensure that investors are treated equitably, including for mining ventures and large-scale exploration pro - jects. COMESA COMESA fosters regional economic integration and provides a framework for investment protection simi - lar to that of SADC. The COMESA Common Investment Area Agreement includes provisions that protect cross-border invest - ments in member states, encouraging international mining companies to operate in Zambia. 5.4 Sources of Finance for Exploration, Development and Mining The mining industry in Zambia relies on diverse financ - ing mechanisms to support exploration, development, and operational activities. These include the following. Equity Financing Private equity funds play a significant role in financing mining projects, especially in their early stages. Loans Public and private loans include loans from com - mercial banks, development banks, or international financial institutions. However, it must be noted that in terms of the Banking and Financial Services Act No 7 of 2017, banks or financial institutions cannot, directly or indirectly (except as the Bank of Zambia may pre - scribe) grant a credit facility or guarantee a debt of a person or common enterprise so that the total value of the credit facility and guarantee, in respect of a per - son or common enterprise, is more than 25% of the regulatory capital of the bank or financial institution. Shareholders may provide loans to mining companies, especially in closely held entities, to finance specific projects or operations. Asset Financing Mining companies leverage asset-backed financing to purchase expensive machinery and equipment. Lend - ers provide financing based on the collateral value of these assets, which are essential for operations.

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