Zambia's Copper Rush: Can Infrastructure and Policy Turn Mines into EV Powerhouses?

Zambia's copper belt has long been a cornerstone of its economy, but the nation is now aiming to transform its role in the global supply chain by leveraging its vast reserves to become a hub for electric vehicle (EV) component manufacturing. With ambitious production targets, strategic infrastructure upgrades, and regulatory reforms, Zambia is positioning itself to capture downstream value in the battery supply chain—turning raw materials into high-margin products. Yet, this vision hinges on overcoming persistent challenges, from energy shortages to declining ore grades. Here's how investors should weigh the risks and opportunities.

The Copper Opportunity: From Mines to Motors

Zambia produced 820,000 metric tons of copper in 2024, solidifying its position as the world's seventh-largest producer. The government aims to triple output to 3 million tons by 2035, a target that could push Zambia into the global top four. Copper is a linchpin of EV production, used in wiring, batteries, and electric motors. A single EV requires 83 pounds of copper on average, nearly double that of a conventional car. With global EV copper demand forecast to hit 5 million metric tons annually by 2034, Zambia's reserves are strategically placed to meet this surge—if it can capitalize on its proximity to markets and secure downstream manufacturing partnerships.

Regulatory Reforms: Laying the Groundwork for Investment

Recent policy shifts under President Hakainde Hichilema have sought to stabilize Zambia's mining sector, which contributes over 69% of its exports. Key reforms include:
- Tax Certainty: Reducing property transfer taxes on mineral rights and making mineral royalties tax-deductible, which lowers costs for foreign investors.
- Transparency: The National Mineral Resources Development Policy (2022) and the pending Minerals Regulation Commission Act aim to curb corruption and clarify ownership stakes.
- Local Content: Easing restrictions on foreign operators to attract capital, while still prioritizing local employment and partnerships.

These changes have already drawn interest from majors like Barrick Gold ($2 billion investment in Lumwana) and International Resource Holdings (bidding $1.1 billion for Mopani Copper Mine). For EV component manufacturing, such reforms are critical to attracting firms like CATL or Tesla, which require stable frameworks to build long-term supply chains.

Infrastructure: Bridging Mines to Markets

Zambia's success in capturing downstream value depends on overcoming logistical and energy bottlenecks.
- Energy: The nation relies on hydroelectricity for 80% of its power, but droughts have caused frequent blackouts. Plans to expand solar and wind capacity to 600 MW by 2030 aim to stabilize energy for mining and manufacturing.
- Transport: The $1 billion Lobito Corridor rail project—linking Zambia's mines to Atlantic ports—will cut export costs by 30% and reduce transit times from 21 to 14 days. China's revamp of the Tazara railway adds further capacity.
- Processing Hubs: Proposals for a special economic zone (SEZ) with the Democratic Republic of Congo (DRC) could combine Zambia's copper with the DRC's cobalt to produce battery-grade materials. A cobalt refinery in Chingola is already under development.

Lithium and Cobalt: Expanding the EV Toolkit

While Zambia is best known for copper, recent discoveries of lithium deposits near the Malawi border and cobalt-rich ores in the Copperbelt add to its allure. A partnership with the DRC—a top cobalt producer—could create an integrated supply chain for EV batteries. For instance, a joint SEZ could host battery anode plants or cathode factories, turning Zambia into a one-stop shop for critical minerals.

Risks on the Horizon

Despite its potential, Zambia faces hurdles that could derail its ambitions:
- Declining Ore Grades: Mines like Kansanshi and Chibuluma are seeing grades fall below 2%, requiring more energy and capital to extract. New deposits like KoBold Metals' Migomba find (the largest in a century) may offset this, but exploration funding remains constrained.
- Tax Volatility: Past fluctuations in royalty rates have deterred investors. Sustaining policy stability will be key to attracting the $5 billion in mining investments pledged by China and Gulf states.
- Informal Mining: Illegal “jerabos” miners and artisanal operations account for 20% of output but lack regulation, posing ESG risks for international firms.

Investment Playbook: Where to Look

1. Copper Processing: Firms like First Quantum Minerals (FQM) and Barrick Gold are expanding operations; their success could pave the way for downstream partnerships.
2. Battery Components: Investors should watch for joint ventures between Zambian miners and battery makers (e.g., CATL, LG Energy Solution) targeting lithium-copper-cobalt integration.
3. Renewable Energy: Solar projects tied to mining operations—like the $200 million Chingola Solar Park—are likely to attract green infrastructure funds.
4. SEZ Development: The Chingola-DRC corridor could become a focal point for EV battery parks, offering tax breaks and streamlined regulations.

Final Take: Zambia's EV Future Is a Gamble Worth Taking

Zambia's ambition to shift from raw material exporter to EV component manufacturer is bold but achievable. With strategic infrastructure, tax stability, and regional collaboration, it could carve a niche in the battery supply chain. However, investors must remain vigilant: energy reliability, ore grade management, and regulatory consistency are non-negotiable. For those willing to navigate these risks, Zambia's copper belt could prove as valuable as the minerals themselves.

Investment Recommendation: Consider exposure to miners with long-term Zambian stakes (FQM, Barrick Gold) and renewable energy projects in the Copperbelt. Avoid pure-play EV battery stocks until concrete partnerships materialize, but keep an eye on the DRC-Zambia SEZ progress.

This analysis underscores Zambia's dual potential: a strategic resource base for the EV revolution and a test case for Africa's shift from raw exports to value-added manufacturing. The stakes are high, but the rewards could be historic.