The Bond Market Debate and Possible Domestic Financing of Mining Investment
…They turned down my Wife’s Participation in the GRZ Bond Market…
By Soyapi Mulenga
You keep asking the question why cant we fund our own mines development in Zambia.
Having worked in a senior capacity on three world-class greenfiled mining developments once ranked among the top 20 globally in copper production, I see the local ownership debate primarily as a financial-infrastructure problem, not only as a policy or capability problem . Never in history of the country have we had such an opportunity to put our money where our mouth is as Zambians . Or an opportunity to own the means of production and get good returns . We need to move away from trying to benefit through aggressive taxation of the few projects we have in operation, look to expand number of players and use the resource for the benefit of the country.
My wife Brenda as she often does asks questions which dont have an easy answer . As one for a challenge I dont mind this one bit actually love this . Our lastest sunday deep dive was around interest rates and the bond auction in Zambia
After Mrs M recieved her notification of unsucessful subscription and refund she had all these questions .Why did a Bank of Zambia bond subscription fail when there is such a strong public call for local investment? On one hand we saying we need a stronger pull for these resources. We read in the news so many poorly run local operations that could achieve comoliance and return with the right funding . This lastest auction shows that Zambians can fund responsible mining under the right conditions . Mrs M question deserves reflection, if local demand is available why dont we have the instruments to attract them and bring them together like the GRZ Bonds . Having had a chance to look at this deeply I believe the answer sits in market structure.
We take the lastest resuts of the auctions in Zambia, those unfamiliar with the process , bond auctions clear through formal allocation mechanisms governed by yield limits, and mandate compliance. Ofcourse risk assesment plays a role.
Mrs M, like numerous investors this weekend were alerted to the fact that bids were unsuccesful. When bids exceed supply by five times like they did , many participants get scaled back or excluded, regardless of willingness or patriotism. Access depends on structure, not sentiment alone . This is what happened .
The same structural gap explains why local ownership in mining remains limited.When local demand for investment in Zambia is very high. With all this apetitte from local investors none of this is being channelled towards mining for structural reasons.
Zambia already has the core ingredients of a domestic ownership base: liquidity, long-term capital, and institutional investors comfortable with duration. The bond market proves this. What is missing is the financial infrastructure that allows mining assets to be packaged in a way domestic capital can actually own. Till now no local mining project has been listed on the stock exchange or alternative market seeking financing . Mines and explorationprojects in Zambia continue to be ignored by Zambian banks and local finacial institutions .
This a problem , local investors cannot own mines through ad-hoc equity stakes, policy-exposed shareholding, or opaque holding-company structures. Pension funds and insurers require ring-fenced assets, senior cash-flow rights, predictable fiscal terms, and clear exit mechanisms. Without these, capital cannot be allocated, regardless of appetite.
Government bonds succeed because the infrastructure exists. There is a defined issuer, transparent pricing, enforceable seniority, secondary-market liquidity, and a regulator-approved framework.
Mining does not yet offer an equivalent asset-level investment framework for local Zambian investors. There is a historical reason for this: the scale and complexity of mining projects, combined with past sovereign risk concerns, made offshore financing the only viable path. The domestic market simply wasn’t deep enough to absorb the risk. The post-reset environment, with restored confidence and liquidity, now makes it possible to change that.
As a result, mining ownership remains offshore. Sponsors raise capital through structured vehicles that reduce risk and cost of capital. Local capital stays out not by choice, but because there is no domestic platform that converts mine cash flows into investable securities.
If Zambia wants meaningful local ownership, it must build ownership infrastructure, not apply fiscal pressure. We need instruments that offer the same clarity as a government bond: royalty-backed instruments where repayments are secured against mine revenues, production-linked bonds, asset-level special purpose vehicles, and infrastructure financing tied to mine output. These would allow domestic investors to own defined, senior claims on cash-flow streams rather than absorbing full equity risk.
Building this platform requires deliberate partnership. Government must provide the predictable fiscal and regulatory framework for these new instruments. Mining companies must engineer their projects to create them. The macro reset has restored confidence and liquidity.
The bond market shows that clearly. The next step is the micro-level financial engineering that turns our world-class mineral endowment into a truly national asset. Until that infrastructure exists, local ownership will remain an aspiration, not an outcome.#zambia#mining