Zambia: Beyond the Ore
THE INTERLOCK | Commonwealth Investment Series, Paper 4
BOTTOM LINE UP FRONT
Everyone sees Zambia as a copper story. The real thesis is infrastructure bottleneck. Zambia sits on the world’s largest undeveloped copper belt, contains significant cobalt, nickel, and manganese reserves, and is positioned at the centre of an African critical minerals supply chain that the US, EU, and UK are desperately trying to build as an alternative to Chinese dominance. None of that matters unless the roads, rails, and power systems that extract and transport the ore exist. They do not, at the required scale. The investor who finances the infrastructure gap gets better risk-adjusted returns than the miner who digs the ore out. The mining equity is already crowded. The infrastructure opportunity is not.
1. THE COPPER THESIS: ACCURATE BUT INCOMPLETE
Confidence: CONFIRMED on resource endowment. ASSESSED on production trajectory.
Zambia is among the world’s top ten copper producers, accounting for approximately 4-5% of global production and ranking seventh or eighth depending on the reference year. The Copperbelt Province, straddling the border with the Democratic Republic of Congo’s Haut-Katanga Province, is one of the most concentrated accumulations of copper ore on the planet. Known reserves at current exploration depth represent decades of production capacity. Deeper and less-explored sections of the belt likely contain multiples of currently mapped resources.
The structural demand case for copper is widely understood. The energy transition requires copper at scale: electric vehicles use two to three times the copper of a conventional car (60 to 83 kg versus approximately 20 to 23 kg), offshore wind installations require five to six tonnes of copper per megawatt of capacity, and grid modernisation for renewable integration across the Western world implies a significant sustained increase in copper demand from a current annual production base of approximately twenty-two million tonnes. BloombergNEF and Wood Mackenzie both project structural copper deficits emerging from the late 2020s. The supply response is constrained by a decade-long underinvestment cycle and by the fact that new large-scale copper mines take fifteen to twenty years from discovery to full production.
This is all true. It is also fully priced into copper equities and most Copperbelt mining investment proposals. The crowded trade is the mining equity itself. First Quantum Minerals and KoBold Metals have committed billions to Zambian copper development. Ivanhoe Mines has committed equivalent scale capital to DRC copper, principally through its Kamoa-Kakula asset in Haut-Katanga Province. That capital will flow. The question for investors seeking differentiated returns is not how to participate in the mining cycle but how to participate in the infrastructure that the mining cycle requires.
2. THE INFRASTRUCTURE GAP: WHERE THE OPPORTUNITY IS
Confidence: CONFIRMED on infrastructure deficits. ASSESSED on investment opportunity sizing.
Power. Zambia’s copper mines are among the most energy-intensive industrial operations in the world. The smelting and refining of copper requires enormous quantities of electricity. Zambia’s power generation capacity is approximately 3,000 megawatts, of which over 85% is hydro. The Kafue Gorge Lower project, adding 750 megawatts, was commissioned in stages from 2022 and is now operational. The Batoka Gorge project, a joint Zambia-Zimbabwe development on the Zambezi River, is in procurement. Both represent significant progress. Neither is sufficient.
The power deficit creates a direct bottleneck on copper production. Mines operate below nameplate capacity because they cannot get reliable electricity. First Quantum’s Kansanshi and Cobre Panama operations have both cited power reliability as an operational constraint. Investments in distributed generation, grid stabilisation, and industrial-scale renewable energy specifically for mining power supply are directly linked to the copper production trajectory. The mining companies need to buy power. They will pay for reliable supply. The investment structure is a power purchase agreement, typically fifteen to twenty years, with a creditworthy offtaker. These are bankable project finance instruments in a market where bankable deals are scarce.
Transport and logistics. Zambia is landlocked. Copper export requires transit through one of several corridors: the Dar es Salaam Corridor through Tanzania to Dar es Salaam port, the North-South Corridor through Zimbabwe and South Africa to Durban, and the Lobito Corridor through the DRC and Angola to Lobito port on the Atlantic coast.
All three corridors are constrained. The TAZARA railway, built by China in the 1970s as an alternative export route, has suffered decades of deferred maintenance and has lost significant cargo market share to road transport. The Lobito Corridor, the subject of major US government investment commitment under the G7 Lobito Atlantic Railway initiative, is the most strategically important logistics project in Central Africa. The US Millennium Challenge Corporation, the EU, and several European bilateral development agencies have committed to its rehabilitation and extension. The US commitment includes a formal partnership with private sector operators for a thirty-year concession on the Zambia extension.
The Lobito Corridor investment is the most important infrastructure development in Zambia’s economic history. It provides a direct Atlantic export route that bypasses South Africa and Zimbabwe, reducing transit risk and cost materially. For investors, the corridor creates a pipeline of ancillary investment opportunities: warehousing, cold chain, freight services, border post facilitation, and the small and medium enterprise ecosystem that grows around functioning logistics infrastructure.
Roads. The rural road network connecting mines and agricultural areas to the main arteries is inadequate. Road quality is the primary determinant of whether agricultural produce and mineral cargo reaches export points at competitive cost. The government’s Zambia Road Development Agency has a capital programme that is chronically underfunded relative to requirements. Road maintenance and rehabilitation contracts represent predictable government-backed revenue streams for infrastructure operators.
3. WESTERN COUNTER-POSITIONING: THE STRATEGIC BACKDROP
Confidence: CONFIRMED on US and EU strategic commitments. ASSESSED on implementation pace.
The United States Minerals Security Partnership, launched in 2022 and expanded in 2023, identifies Zambia as a priority jurisdiction for critical minerals supply chain development. The MSP’s specific focus is on copper, cobalt, and the downstream processing and refining capacity that currently resides predominantly in China. China controls approximately 70% of global cobalt refining and a significant share of copper smelting capacity. The Western objective is to develop alternative supply chains that do not run through Chinese processing.
This creates a policy environment that is unusually favourable for infrastructure investment in Zambia. The US Development Finance Corporation has active programming in Zambia. The UK Development Capital facility, formerly CDC Group and now British International Investment, has long-standing Zambia exposure and is actively looking to expand. EU blended finance under the Global Gateway initiative has identified the Lobito Corridor as a flagship project. This is not rhetoric. Specific capital commitments have been made, contracts signed, and in several cases construction has started.
For private investors, this policy environment is a risk mitigant, not a guarantee. Government development finance does not protect private capital from Zambian political risk. What it does is create a pipeline of co-investment opportunities where private capital can participate alongside multilateral and bilateral development finance, benefiting from the due diligence, procurement standards, and political risk negotiation that development finance institutions bring to structuring.
4. ZAMBIA’S DEBT STORY: SIMILAR TO SRI LANKA, DIFFERENT RISK PROFILE
Confidence: CONFIRMED on debt restructuring completion. ASSESSED on fiscal trajectory.
Zambia completed its Eurobond debt restructuring in 2023, the first African sovereign restructuring under the G20 Common Framework. Like Sri Lanka, it involved protracted negotiations with China as a major creditor. Like Sri Lanka, it produced an IMF programme with fiscal conditionality. Unlike Sri Lanka, Zambia’s restructuring has received somewhat less favourable terms relative to its debt burden, reflecting both the composition of the creditor base and the weaker starting position of the economy.
The IMF programme is on track. The primary fiscal balance has improved materially. The kwacha has stabilised. The risk for investors is that Zambia’s fiscal space is narrower than Sri Lanka’s, its export base is less diversified, and its government capacity to implement structural reforms is more constrained.
The fiscal risk should be priced in investment structure, not treated as a reason to abstain. Infrastructure investments with government-backed revenue streams, denominated in USD where possible, structured through English-law financing agreements, and with co-investment from DFIs that have political risk mitigation tools, can generate acceptable risk-adjusted returns despite the fiscal constraints.
5. THE INVESTMENT AND ECONOMIC CASE
Zambia is the dominant copper producer in sub-Saharan Africa and among the top ten globally, with GDP of approximately USD 27 to 29 billion in 2024 (IMF, 2024; World Bank, 2024). Real GDP growth has averaged 4 to 5 per cent, with copper-driven volatility: the 2023 to 2024 period was constrained by power supply deficits that reduced smelter output and compressed fiscal revenues. The structural growth outlook has improved materially since the completion of Zambia’s debt restructuring under the G20 Common Framework in October 2023, making it the first African country to complete that process and removing the principal sovereign overhang that had deterred institutional investors. UK-Zambia bilateral trade is estimated at approximately £500 to 700 million annually (HMRC, 2024). FDI inflows have averaged USD 800 million to 1.2 billion annually (UNCTAD, 2024; Zambia Development Agency, 2024).
The investability case is built on the energy transition. Copper is the indispensable metal of electrification: each electric vehicle contains approximately 60 to 83 kilograms of copper compared with approximately 23 kilograms in a conventional vehicle, and grid infrastructure expansion requires copper at a scale that current global supply chains cannot meet on current trajectory. CONFIRMED: Zambia holds some of the world’s highest-grade copper deposits across the established Copperbelt and the emerging North-Western Province. PROBABLE: the Zambian government’s intent to develop downstream smelting and refining capacity will attract specialist processing capital from the UK and Europe as the energy transition investment thesis matures.
Key sectors with the strongest UK-relevant opportunity: copper mining and processing, with royalty and streaming structures preferred to direct operational equity given frontier market risk; cobalt and nickel co-production as a supply chain diversification play away from DRC; agricultural processing; renewable energy generation to address the power supply deficit; and financial and professional services.
Principal investment risks: single-commodity economic vulnerability during copper price downturns; severe power supply constraints (Kariba hydropower capacity under increasing drought stress); political risk; residual Chinese debt creating creditor subordination risk for new Western entrants; Zambian Kwacha currency volatility; and limited exit liquidity.
One action in the next 12 months: Evaluate a minority equity stake in a mid-tier copper royalty or streaming company with Zambian asset exposure. Royalty and streaming structures provide copper price upside without direct operational and political risk, offer better secondary market liquidity than direct mining equity in frontier jurisdictions, and are structured to survive sovereign stress events. The post-restructuring window, before the next copper price cycle peaks and re-rates asset values, is the optimal entry point.
6. WHAT BALANCES THIS POSITION
Confidence: CONFIRMED on structural risks. ASSESSED on probability.
Political risk under the Hichilema government. President Hakainde Hichilema is genuinely pro-market and pro-Western in his policy orientation. This is a contrast with his predecessors and is one reason Western DFIs are more actively engaged than in previous administrations. The risk is that the government’s ambitions outpace its implementation capacity, or that political pressures from mining communities, public sector unions, and opposition parties create policy instability in the medium term.
Currency and fiscal risk. The kwacha is volatile. Infrastructure investments denominated in kwacha without USD revenue linkage carry significant FX risk. Project finance structures that build in USD denomination or hedging arrangements are essential, not optional.
Security in the Copperbelt. Zambia is considerably more stable than most of its neighbours. However, the DRC border region creates spillover risk: crime, artisanal mining encroachment, and periodic movement of armed groups across the border. This is an operational risk for mining and infrastructure companies, not a systemic investment risk, but it requires active security management.
Chinese incumbency. China is heavily present in Zambian mining and infrastructure. Chinese state-owned enterprises hold significant positions in several major copper mines. Chinese contractors have built significant road and power infrastructure. Western investors entering the Zambian infrastructure market will encounter Chinese competition on price and financing terms. The Chinese offer is typically cheaper in the near term. It carries political dependencies that the government is trying to reduce, but the competitive reality should not be underestimated.
7. RECOMMENDATIONS
For PE and M&A investors. The infrastructure thesis is the differentiated trade. Priority structures: power purchase agreements for mine-dedicated renewable energy generation, logistics and warehousing along the Lobito Corridor, and road maintenance concessions with government offtake. Co-investment with BII, the DFC, or the EU Global Gateway provides deal flow, due diligence, and political risk tools. Direct mining equity is crowded and better accessed through listed vehicles. The infrastructure layer is the unlisted opportunity.
For UK businesses. BII is the UK’s primary DFI for Africa and has significant Zambia programming. UK businesses in construction, logistics, power systems, and project management have natural entry points into Zambia through BII co-investment or as contractors on BII-supported projects. The FCDO also has active programming in Zambia, including through the Lobito Corridor initiative. UK businesses that position early in this programme pipeline have access to government-supported deal flow that is unavailable to latecomers.
For government and advisory clients. Zambia is the test case for the G20 Common Framework’s ability to restructure sovereign debt with Chinese creditor participation. The lessons from Zambia are being applied to Ghana, Ethiopia, and potentially other African sovereigns with debt problems. Understanding the Zambia template in detail has advisory value across a range of African debt restructuring contexts.
For individual subscribers. First Quantum Minerals, listed on the Toronto Stock Exchange, is the largest foreign mining investor in Zambia with significant Copperbelt exposure. The stock has been volatile because of Panama political risk reducing FQM’s total production, not because of Zambia specifically. For an individual investor wanting copper exposure that captures the Zambian growth thesis, FQM is the most liquid vehicle. Note the company-level execution risk on the Panama project separately from the Zambia thesis.
This paper represents the assessment of The Interlock’s intelligence team as of May 2026. PHIA confidence levels applied throughout. Copper production data sourced from USGS Minerals Yearbook. Lobito Corridor data sourced from US MCC and EU Global Gateway published documents.
The Interlock. theinterlock.org