The Unseen Benefits of Mining Investment in Zambia
The Unseen Benefits of Mining Investment in Zambia

What are the Unseen Benefits of Mining Investment in Zambia? Mining investment in the developing world often gets a bad rap, with the common refrain being that it does little to benefit the average person. While it’s true that mining and other forms of extractive industries can have negative environmental impacts, from air and water pollution to noise and deforestation, in many cases it’s not nearly as bad as portrayed by naysayers. In fact, mining investments in some countries may actually prove beneficial in terms of creating jobs and spurring development. Here are three reasons why mining investment has its benefits even when it seems like things are going wrong on the surface.

Capital construction


As an investment vehicle, mining finance is a relatively small market. There’s a limited number of companies involved and funds available in relation to other asset classes, so it’s fairly easy for investors with modest sums to gain access. Because many mining investments are long-term plays, capital construction (or rather reinvestment) can offer greater returns than trading.

Property Tax


In most countries, mining companies are required to pay local property taxes. When a mine is first established, it pays 100% of its profits in taxes during its production phase. During any given year, there are many months when the mine is not operating and therefore no tax revenues will be collected from that specific month; however, production from other mines may help make up for lost revenue if mining activity in that area is at an all-time high.

Employment


Many countries with healthy mining industries have low unemployment rates. In fact, studies in Australia and Zambia have shown that for every one job created by a mine, three or four more are generated throughout local communities. In addition to immediate employment opportunities, an influx of revenue into a region often means that new businesses can open up and provide jobs for locals, who might not otherwise have access to professional careers. Governments tend to invest revenue from mines back into local communities through infrastructure projects, scholarships and other programs for community members.

Risk assessment


There is a risk involved in investing your money on any business. However, mining investments are considered high-risk since it involves spending money to purchase minerals, metals and stones that you can only sell when you have found buyers. If no one wants to buy them then there’s no way you can recoup your investment back.

Banking system support


Mining investment plays a big role in building up a country’s banking system. In most cases, mines will set up their own bank account to manage all payments that come in and out. This might include salaries for staff and suppliers, as well as government tax payments (some mines even have private police forces to help protect workers). The money that is held in these accounts can be used by banks to increase lending across other sectors—in turn, creating more jobs and bolstering economic growth.

Education and health care


Many countries are investing billions in education and health care. These two industries don’t get as much media attention as mining, but they should. In many places around the world, including emerging markets like Russia and China, low literacy rates among adults are a crippling factor in economic growth. According to World Bank data, adult literacy rates in emerging markets average about 84 percent. That’s not bad—but it could be better.

Improved government service provision


Mining companies are typically required to build and fund roads, bridges, water systems, schools and other public amenities. In areas that have traditionally been neglected by local governments—areas that may not even be on government maps—these improvements can be huge.

Improved infrastructure


Mining is one of those activities that generally delivers a country with quite a bit of infrastructure. In addition to building roads and bridges, mining projects require an often-considerable amount of housing, hospitals, and offices. This can be a big benefit to countries that don’t have these facilities readily available in their own cities.

Environmental management


The environmental impact is typically one of the primary concerns to consider in mining projects, whether it’s in terms of preserving natural resources and preventing pollution or meeting stringent regulations. However, there are plenty of financial benefits to mining investment, most notably when it comes to boosting local economies.

Improved government image


Investing in developing economies has a major impact on a country’s image. Investing helps to lift up struggling economies and gives people hope that they can rise out of poverty and start building a better life for themselves. When an economy grows, there is less unemployment and people are much more likely to get educated, leading to higher income rates.

LEAVE A REPLY

Please enter your comment!
Please enter your name here