Figure 1: Copper prices, US dollars per tonne, 2014–2022

Figure 2: Zambia: copper output and real GDP growth, 2014–2022

Extract A

Zambia's struggle with commodity price cycles

Zambia's economy remains highly vulnerable to fluctuations in the global price of copper, which accounts for over 70% of its export earnings and roughly 15% of its GDP. China imports nearly half of Zambia's refined copper, meaning any slowdown in Chinese industrial activity impacts Zambian export revenues immediately. Following a slump in international copper prices in late 2015, government tax revenues contracted dramatically. Major mining operations struggled to maintain profitability, resulting in scaling down of operations and job losses.

In recent years, Zambia has sought to diversify its economy by encouraging growth in agriculture, tourism, and services. However, progress has been slow. Public services are under strain, and Zambia faces high levels of external public debt, which exceeded 110% of GDP in 2020, leading to a default on its sovereign debt. High inflation, which peaked near 22% in 2021, driven by a depreciating currency (the kwacha), has limited the central bank's ability to employ expansionary monetary policy. The bank's target inflation band is 6–8%, but imported inflation and global food supply disruptions have kept rates persistently high. Structural reforms aimed at achieving fiscal sustainability and reducing inequality are underway, but require substantial international support.

Extract B

Challenges facing the copper mining sector in Zambia

While Zambia possesses some of the world's highest-grade copper reserves, the domestic mining industry faces major structural bottlenecks. After decades of deep-pit exploitation, many older mines are reaching the end of their lifespans, requiring more expensive technology to extract deeper, lower-grade deposits. Power supplies present an ongoing barrier: copper processing is energy-expensive, yet Zambia relies heavily on hydroelectric power from the Kariba Dam, which has been severely disrupted by recurring droughts. Mining companies are forced to purchase costly imported or thermal electricity, raising production costs.

Transport and logistics present another massive hurdle. Unlike coastal exporters, landlocked Zambia must transport its copper thousands of kilometres by road or rail through neighbouring countries to reach Indian Ocean ports like Dar es Salaam or Beira. This adds substantial transportation overheads and leaves exporters vulnerable to border delays and regional political instability.

Furthermore, frequent changes in mining tax regimes and royalty rates over the last decade have created immense policy uncertainty, deterring long-term foreign direct investment. Investors have diverted capital to neighboring jurisdictions with more stable tax environments.