Zambia’s Development Agreements and the Soaring Copper Prices

Since the discovery of copper deposits in Zambia during the 1930s, copper has spelled both doom and boom for the country’s social, political and economic activities. Even after a significant decline in production over the last decade and half, the copper industry continues to be the major export commodity amounting to over 70% of export value and over 75% of total foreign exchange earnings.1 From this, it is apparent that the copper industry still plays a critical role in the political economy and development of the country.

This paper looks at the current mining contracts (development agreements as they are officially called) entered into between the Government of the Republic Zambia (GRZ) and the different mining companies working in Zambia. Assessment of these agreements is prompted by the recent increase in copper prices on the London Metal Exchange (LME) and the consequent move by GRZ to renegotiate the agreements. These contracts are examined from the point of view of the bargaining approach under which the agreements were formulated and adopted. The assumptions on which the bargaining theory is based are questioned in the light of the evidence emerging from the Zambian situation.