At last year’s US Africa leaders summit in Washington the US signed an historic memorandum of understanding with Zambia and the Democratic Republic of Congo to develop an electric vehicle battery supply chain. At the summit, Zambian President Hakainde Hichilema also announced that Kobold metals, an exploration firm backed by billionaires Bill Gates, Jeff Bezos and Richard Branson, will invest US$150 million to develop a new mine in Zambia.
Zambia is particularly well positioned to supply what the world needs. It has substantial reserves of copper and cobalt, critical metals for the transition from fossil fuels to renewable energy. Due to their broad uses in wind and solar powered technology and electric vehicle production, these metals will play a crucial role in a low carbon future. Copper demand is expected to increase up to threefold by 2040 while cobalt demand is expected to rise over 20 fold. Zambia has 6% of the world’s copper reserves, and the metal accounts for up to 80% of its export earnings. The coming copper boom presents Zambia with an extraordinary opportunity – to enable mining profits as well as to power inclusive growth.
But, as Zambia’s history shows, this is easier said than done. Successive rises in copper prices have not translated into reducing poverty or inequality. Zambia is still the fourth most unequal country in the world. Based on our published research and expertise – including work with the International Growth Centre in the London School of Economics and engagement with the Zambian government on a research agenda for the country’s mining sector – we argue that Zambia can benefit from the energy transition underway. But it can only do so by harnessing the non-tax benefits of mining.
Non-tax benefits are the opportunities that stem from the mining activity itself. Most mining firms spend the bulk of their revenue on operational and capital expenditures, a larger share than goes towards either profits or government tax. A non-tax benefit approach would mean that Zambian companies and workers would participate in mining’s value chain, and Zambian communities would benefit from the infrastructure needed to extract and move the bulk materials. In the past, Zambia has been more focused on capturing tax benefits through changes to the fiscal regime. But a balanced approach of a stable mining taxation policy and the pursuit of non-tax benefits could deliver broader gains.
Zambia’s unequal growth story
Zambia’s track record for converting commodity booms into tangible benefits is mixed at best. Take the last commodity cycle. Sparked by growing demand from China, copper prices began to increase in 2004. From 2003 to 2006 the price of copper, Zambia’s main export, more than tripled. Zambia’s economic growth rate took off in response. (See Figure 1.) Yet there was no corresponding impact on poverty and income inequality. Zambia’s Gini coefficient, a measure of inequality, actually rose slightly during the cycle.
Even Zambia’s poverty rate, as measured by the percentage of the population living on less than US$2.15 per day (in 2017 purchasing power parity dollars), rose through 2010 before starting to reverse. That year, a stunning 68.5% of Zambia’s people were living in poverty in a country where annual GDP per person was a much more impressive US$3,125.52 (also in 2017 dollars) – four times the poverty rate.
Figure 1.Authors’ computations from World Bank Data
During commodity booms, governments may be tempted to focus on capturing short-term gains, which are frequently understood in monetary terms and primarily as tax benefits. For Zambia, this dynamic was overlaid on top of the disastrous advice the government had received on how to reopen its previously nationalised copper sector a decade earlier.
The Zambian government entered into unfavourable terms with new mine owners, offering generous tax incentives that led to a loss in tax revenue just a handful of years before the copper price rose. This fuelled a fixation on getting tax revenue from the sector. In 2008, amid the boom, Zambia introduced a windfall tax on mining profits in an attempt to capture more benefits from the sector. Less emphasis was placed on the largely untapped non-tax benefits.
Why non-tax benefits?
Non-tax benefits are where the real potential to drive inclusive growth lies, as we detail below. Figure two is a hypothetical one that illustrates the point. For every $100 generated in revenue, imagine that $70 is spent on operational and capital expenditures, that is, running the mine and expanding operations. (This is not unrealistic: margins in the sector are not very high most of the time.)
If more of this were spent within the country rather than being sent abroad to import the majority of goods and services, it could contribute to business opportunities for Zambian companies and high-paying jobs for Zambian workers.
In 2012, the costs of goods and services consumed “upstream” by the Zambian mining sector was valued at US$2.5 billion annually. Spending more of that domestically would have a much wider impact. It would create income and jobs directly. And that income would finance further consumption and investment through the local economy.
Figure 2.Authors’ illustration
Non-tax benefits can also emerge from “sidestream” projects related to mining expenditure, adding value to the wider economy. The power, rail and road projects that enable mining activity can provide the backbone to make other economic activities competitive. “Downstream” linkages are also possible – delivering the mining firm’s output to other firms that process it into intermediate goods and final products.
Figure 3.Lombe 2020, adapted from Fessehaieet al. 2015:53
What would non-tax benefits look like for Zambia?
Figure three shows the breakdown of Zambian mining firms’ goods and services expenditure.
In 2012, 96% of all service were provided by foreign firms. Only 4% were provided by Zambian-owned firms. These were mostly supplying non-core goods and services such as catering, security and office maintenance. Capturing more of mining’s upstream value chain in Zambia represents a major growth opportunity. One way to make this happen is through a local content strategy that would give a greater role to Zambian suppliers and workers in the mining sector. Another growth opportunity is the side-stream linkages with the electricity generation sector. For example, a mining company could sell surplus renewable power to the grid.
Zambia shouldn’t ignore mining taxation
By advocating for non-tax benefits, we are not suggesting that taxation be ignored. Copper reserves over time will run out, or copper will be rendered obsolete by some new technology. This is the risk with all natural resources. A government must generate tax revenue from its mineral resources while it can.
Multinational companies can find ways to pay as little tax as legally possible. In the past, Zambia tried to stop this by tinkering repeatedly with the mining tax system – without getting results. Better would be to leave the tax regime in place and instead focus on monitoring and collection.
A governance dividend
Zambia’s government must keep in mind that poor governance will be a constraint to achieving any future – tax or non-tax – benefits. This was the case during Zambia’s last boom. But the country is currently reaping a governance dividend with a new investor-friendly president, restored donor confidence and a recently secured IMF deal. The conditions are in place for Zambia to use this boom to generate inclusive development.
The theme of this year’s Earth Day is “Planet vs. Plastics” – a theme chosen to raise awareness of the damage done by plastic to humans, animals and the planet and to promote policies aiming to reduce global plastic production by 60 percent by 2040.
As our chart shows, global plastics use has increased rapidly over the past few decades, growing 250 percent since 1990 to reach 460 million tonnes in 2019, according to the OECD’s Global Plastics Outlook, which projects another 67-percent increase in global plastics use by 2040 and for the world’s annual plastic use to exceed one billion tonnes by 2052. As our chart shows, packaging is the largest driver of global plastics use, which is why a rapid phasing out of all single use plastics by 2030 is one of the policy measures proposed under EARTHDAY.ORG’s 60X40 framework.
Other major applications of plastics include building and construction, transportation as well as textiles, with the fast fashion industry particularly guilty of adding to the world’s plastic footprint. “The fast fashion industry annually produces over 100 billion garments,” the Earth Day organizers write. “Overproduction and overconsumption have transformed the industry, leading to the disposability of fashion. People now buy 60 percent more clothing than 15 years ago, but each item is kept for only half as long.” Most importantly, the organization points out that 85 percent of disposed garments end up in landfills or incinerators, while just 1 percent are being recycled.
Felix Richter is a Data Journalist
This article was first published in the Statista.com.
Algeria’s Tassili N’Ajjer plateau is Africa’s largest national park. Among its vast sandstone formations is perhaps the world’s largest art museum. Over 15,000 etchings and paintings are exhibited there, some as much as 11,000 years old according to scientific dating techniques, representing a unique ethnological and climatological record of the region.
Curiously, however, these images do not depict the arid, barren landscape that is present in the Tassili N’Ajjer today. Instead, they portray a vibrant savannah inhabited by elephants, giraffes, rhinos and hippos. This rock art is an important record of the past environmental conditions that prevailed in the Sahara, the world’s largest hot desert.
These images depict a period approximately 6,000-11,000 years ago called the Green Sahara or North African Humid Period. There is widespread climatological evidence that during this period the Sahara supported wooded savannah ecosystems and numerous rivers and lakes in what are now Libya, Niger, Chad and Mali.
This greening of the Sahara didn’t happen once. Using marine and lake sediments, scientists have identified over 230 of these greenings occurring about every 21,000 years over the past eight million years. These greening events provided vegetated corridors which influenced species’ distribution and evolution, including the out-of-Africa migrations of ancient humans.
These dramatic greenings would have required a large-scale reorganisation of the atmospheric system to bring rains to this hyper arid region. But most climate models haven’t been able to simulate how dramatic these events were.
As a team of climate modellers and anthropologists, we have overcome this obstacle. We developed a climate model that more accurately simulates atmospheric circulation over the Sahara and the impacts of vegetation on rainfall.
We identified why north Africa greened approximately every 21,000 years over the past eight million years. It was caused by changes in the Earth’s orbital precession – the slight wobbling of the planet while rotating. This moves the Northern Hemisphere closer to the sun during the summer months.
This caused warmer summers in the Northern Hemisphere, and warmer air is able to hold more moisture. This intensified the strength of the West African Monsoon system and shifted the African rainbelt northwards. This increased Saharan rainfall, resulting in the spread of savannah and wooded grassland across the desert from the tropics to the Mediterranean, providing a vast habitat for plants and animals.
Our results demonstrate the sensitivity of the Sahara Desert to changes in past climate. They explain how this sensitivity affects rainfall across north Africa. This is important for understanding the implications of present-day climate change (driven by human activities). Warmer temperatures in the future may also enhance monsoon strength, with both local and global impacts.
Earth’s changing orbit
The fact that the wetter periods in north Africa have recurred every 21,000 years or so is a big clue about what causes them: variations in Earth’s orbit. Due to gravitational influences from the moon and other planets in our solar system, the orbit of the Earth around the sun is not constant. It has cyclic variations on multi-thousand year timescales. These orbital cycles are termed Milankovitch cycles; they influence the amount of energy the Earth receives from the sun.
On 100,000-year cycles, the shape of Earth’s orbit (or eccentricity) shifts between circular and oval, and on 41,000 year cycles the tilt of Earth’s axis varies (termed obliquity). Eccentricity and obliquity cycles are responsible for driving the ice ages of the past 2.4 million years.
The third Milankovitch cycle is precession. This concerns Earth’s wobble on its axis, which varies on a 21,000 year timescale. The similarity between the precession cycle and the timing of the humid periods indicates that precession is their dominant driver. Precession influences seasonal contrasts, increasing them in one hemisphere and reducing them in another. During warmer Northern Hemisphere summers, a consequent increase in north African summer rainfall would have initiated a humid phase, resulting in the spread of vegetation across the region.
Eccentricity and the ice sheets
In our study we also identified that the humid periods did not occur during the ice ages, when large glacial ice sheets covered much of the polar regions. This is because these vast ice sheets cooled the atmosphere. The cooling countered the influence of precession and suppressed the expansion of the African monsoon system.
The ice ages are driven by the eccentricity cycle, which determines how circular Earth’s orbit is around the sun. So our findings show that eccentricity indirectly influences the magnitude of the humid periods via its influence on the ice sheets. This highlights, for the first time, a major connection between these distant high latitude and tropical regions.
The Sahara acts as a gate. It controls the dispersal of species between north and sub-Saharan Africa, and in and out of the continent. The gate was open when the Sahara was green and closed when deserts prevailed. Our results reveal the sensitivity of this gate to Earth’s orbit around the sun. They also show that high latitude ice sheets may have restricted the dispersal of species during the glacial periods of the last 800,000 years.
Our ability to model the African humid periods helps us understand the alternation of humid and arid phases. This had major consequences for the dispersal and evolution of species, including humans, within and out of Africa. Furthermore, it provides a tool for understanding future greening in response to climate change and its environmental impact.
Refined models may, in the future, be able to identify how climate warming will influence rainfall and vegetation in the Sahara region, and the wider implications for society.
Edward Armstrong is a postdoctoral research fellow, University of Helsinki
A new draft text on global stocktake has been published at the UN climate summit, COP28 UAE, on Wednesday morning. While the draft text does not contain the words “phase out”, it includes reference to transitioning away from all fossil fuels to enable the world to reach net zero by 2050.
The text published by the UN’s climate body calls on parties to accelerate and substantially reduce non-carbon dioxide emissions worldwide with a focus on reducing methane emissions by 2030. “We all want to get the most ambitious outcome possible,” Majid Al Suwaidi, COP28 Director-General, said on Tuesday.
The text, published early Wednesday, does not specifically refer to oil, but mentions the need to ‘phase-down’ coal. It says that it recognises the need for ‘deep, rapid and sustained reductions in greenhouse gas emissions in line with 1.5C pathways and calls on Parties to contribute to global efforts.
Among those efforts it recognises the need to triple renewable energy capacity by 2030 and doubling the annual rate of energy efficiency improvements by the same date. It also recognises the need to accelerate the phase-down of coal and accelerate towards net zero energy systems, utilising zero or low carbon fuels by mid century.
While the document does not mention oil or combustion engines, it does recognises the need for accelerating the reduction of emissions from road transport on a range of pathways, including through development of infrastructure and rapid deployment of zero and low-emission vehicles. It also recognises the need to phase out inefficient fossil fuel subsidies that do not address energy poverty or just transitions, as soon as possible.
Finance specifics
On the subject of finance, the document said developed countries should continue to take the lead in mobilising climate finance from a wide variety of sources, instruments and channels, noting the significant role of public funds, through a variety of actions, including supporting country-driven strategies, and taking into account the needs and priorities of developing countries.
Such mobilisation of climate finance should represent a progression beyond previous efforts, the text said. It may provide small comfort to campaigners from developing countries who implored Parties to begin the phase out of fossil fuels and provide vastly improved access to funding for renewables.
The document highlights the persistent gap and challenges in technology development and transfer and the uneven pace of adoption of climate technologies around the world.
It further urges Parties to address these barriers and strengthen cooperative action, including with non-Party stakeholders, particularly with the private sector, to rapidly scale up the deployment of existing technologies, the fostering of innovation and the development and transfer of new technologies.
It also emphasizes the ongoing challenges faced by many developing country Parties in accessing climate finance and encourages further efforts, including by the operating entities of the Financial Mechanism, to simplify access to such finance, in particular for those developing country Parties that have significant capacity constraints, such as the least developed countries and small island developing States.
