Zambia's economy is totally dependent upon its mining sector, and particularly its copper mines. Mining contributes about 15% of the country's GDP and around 80% of its export earnings.
Zambia has large, high-quality deposits of copper ore and, in 2003, was the world's fourth largest copper-producer (after Chile, Russia, Canada and Peru). Its output had declined from around 700,000 tonnes in the late 1970s to a low of 228,000 tonnes in 1998.
Before 2000, all the mines were controlled by the parastatal Zambia Consolidated Copper Mines (ZCCM), which had long been viewed as the jewel of Zambia's economic crown. Of these, Nchanga and Nkana mines alone accounted for 65% of Zambia's total copper production. However, disuse and mismanagement have caused Zambia's mines to degenerate. By the late 1990s they were recording losses of around US$15–20 million per month.
As part of the government's ongoing privatisation programme, ZCCM was to be sold off to stem the losses and give the mines some chance of survival. In June 1998, the government controversially rejected an offer, maintaining that the price was too low. This was costly, as it wasn't until 2000 that they were eventually privatised, and bought by a consortium led by Anglo American. The irony of the situation is that the mines had originally belonged to Anglo American before KK nationalised them.
The years 2001 and 2002 saw a much-needed flow of new capital into mine and plant rehabilitation. By 2002, production had recovered to 337,000 tonnes, with improvements in the world copper market magnifying the effect of this increase on revenues. However, problems in the mining sector continue and in January 2002 Anglo American announced its intention to withdraw from Konkola Copper Mines (KCM) and the related Konkola deep mining project (KDMP). The Zambian government worked with the World Bank and others to find a rescue package. Predictions for 2004 suggest a bumper year, producing as much as 420,000 tonnes.
Zambia is the world's largest producer of cobalt, producing around 5,000 tonnes per annum of this valuable, strategic metal: around 20% of the world's total production. It is usually produced as a by-product of copper or nickel mines; and in one Zambian deal, a private mining company was granted rights to extract cobalt and copper from Nkana's slag heap. The company estimated that this still contains about 56,000 tons of cobalt and 86,000 tons of copper.
Zambia has only one recently privatised coal mine, at Maamba, where reserves are enormous but production has been declining for some time. It was running at about 300,000 tonnes per annum in the late 1990s, but declined to 104,000 tonnes in 2001, and only 80,000 tonnes in 2002. The mine has a design of one million tonnes per annum, so it has long been noted that its production could increase substantially if modern machinery and more efficient practices were introduced.
Other mineral resources
Zambia has natural resources of amethyst, fluorite, feldspar, gypsum, aquamarine, lead, zinc, tin and gold – as well as a variety of gemstones. All are on a small scale, and few are being commercially exploited. An exception is emeralds, which are said to be among the highest quality in the world. These are being mined to the order of about US$200 million per year. However, about half of them are thought to be smuggled out of the country, so the real amounts remain uncertain.