CHINESE mine operators in Zambia began paying royalties and taxes in yuan from October, marking the first confirmed acceptance of mining tax payments in renminbi by African authorities, said Bloomberg News.
“A large portion of copper exports go to China and the Chinese mining firms already receive some, if not all, of their payments for their exports to China in renminbi,” said the newswire citing a statement from the Bank of Zambia.
“The Bank of Zambia has the diversification and building-up of its reserves as a key objective, and purchasing renminbi enables the bank to actualise this objective.”
The development in Africa’s second-largest copper producer represents Beijing’s advancing efforts to internationalise its currency across the continent, particularly in heavily indebted nations, said Bloomberg. Kenya converted dollar loans owed to China into yuan-denominated debt this year, whilst Ethiopia commenced similar discussions and Zambia indicated it would consider following suit, it said.
The central bank first introduced regulations in 2018 requiring mining companies to sell dollars for royalty payments, expanding these to cover all mining tax payments in 2020 amid efforts to bolster government dollar reserves during rising external debt pressures.
Mine operators can now select between selling dollars or renminbi to the Bank of Zambia for tax settlements. The central bank began publishing official renminbi-kwacha exchange rates last month to facilitate transactions.
Holding foreign currency reserves in renminbi will enable Zambia to service Chinese debts more cost-effectively, according to the central bank.
Canadian miners First Quantum Minerals and Barrick Mining accounted for approximately two-thirds of Zambian copper output in 2024. However, China Nonferrous Mining and other Chinese operators are investing billions to expand production as copper posts its largest annual price gain since 2009, said Bloomberg.
Joseph Jalasi, senior partner at Dentons’ local unit, noted practical acceptance depends on the Bank of Zambia’s reserve management policy, pricing mechanisms and operational market guidance.
