Zambia becomes the first African country to take mining taxes in China’s yuan

Chinese Yuan Expands Its Reach in Africa’s Mining Finance

Breaking: African mining budgeting and tax payments are moving closer to Beijing’s currency as yuan gains shadow the conventional dollar route. A growing mix of policy shifts and debt restructurings show China’s currency footprint widening alongside its already deep trade ties with the continent.

Zambia Tests Yuan for Tax Payments Amid Mining Boom

In Zambia, officials say Chinese firms dominate copper trade, and many export payments to Chinese buyers are already settled in renminbi. The central bank frames this as part of a broader strategy to align reserve management with export reality, giving miners more options when settling tax bills.

Officials emphasize that the Bank of Zambia’s goal is to diversify reserves, and expanding renminbi holdings is seen as a practical means to support that objective. A bank statement noted that a large share of copper exports flows to China, and some miners are already receiving payments in yuan for their shipments.

As part of this shift, the central bank began publishing an official renminbi–kwacha exchange rate, enabling mining operators to choose whether to sell dollars or yuan when paying taxes.The policy aims to smooth currency risk and offer greater versatility to a sector pivotal to Zambia’s economy.

Kenya’s Debt Restructuring Signals Currency Diversification

In a related move this year, Kenya restructured part of its Chinese debt by converting a portion of a $5 billion railway loan into yuan-denominated obligations. The policy is projected to reduce annual financing costs by about $250 million as the economy manages a debt load tied to critical infrastructure.

The change illustrates how debt management strategies can be paired with currency diversification to relieve pressure on finances, while also expanding yuan’s role in Africa’s broader financial architecture.

Why This Matters for Africa’s Mining Economy

Analysts say the shift signals China’s influence in Africa’s mining sector is not just about shipments but also about how payments and debt are structured. A stronger yuan presence could affect balance sheets, currency risk, and the cost of financing mining projects across the region.

Key facts At a Glance

Country	Action	Currency(s) In Play	Expected Benefit	Notes
Zambia	Railway to tax payments and reserve management adjustments	Renminbi (yuan) and kwacha	Enhanced reserve diversification; potential tax-payment flexibility for miners	Official exchange rate published; miners may pay taxes in yuan
Kenya	debt restructuring of yuan-denominated loan for a railway	yuan (renminbi)	Estimated annual savings of about $250 million	Conversion of part of a $5 billion Exim Bank loan

What This Means Going Forward

As African economies balance growth, debt, and currency risk, yuan-denominated arrangements could offer relief for heavy capital burdens tied to commodity markets. yet, experts caution that currency diversification also introduces exchange-rate exposure and requires robust risk management in both public finances and corporate ledgers.

Reader Questions

Do you think more African countries will adopt yuan-denominated debt or tax payments in the coming years? What other currencies should policymakers monitor as potential competitors to the dollar in commodity finance?

Share your thoughts below and join the conversation about how currency choices shape Africa’s mining future.

Disclaimer: Financial and legal implications of currency diversification vary by country. Readers should consult official sources for the latest policy details.

Zambia’s Historic Shift to Yuan‑Based Mining Taxes

Policy Overview

• Effective date: 1 January 2025, Zambia’s Ministry of Finance announced that all mining royalties and corporate taxes can be paid in Chinese yuan (CNY) alongside the customary US dollar (USD).
• legislative basis: The amendment to the Mining Act 2022 (Section 23‑B) authorises “foreign‑currency tax payments in recognized reserve currencies, including the Chinese yuan.”
• Scope: Applies to all mineral extracts—copper, cobalt, zinc, and emerging rare‑earth projects—regardless of ownership structure.

Rationale Behind Choosing the Yuan

1. Diversification of foreign‑exchange reserves – Reduces over‑reliance on the USD and mitigates balance‑of‑payments volatility.
2. Strengthening China‑Zambia trade ties – China is Zambia’s top mining equipment supplier and a major source of foreign direct investment (FDI).
3. Currency stability – The yuan’s relatively low inflation rate (≈ 2 % YoY, 2025) offers a predictable tax‑payment habitat.
4. Access to Chinese financing – Companies that settle taxes in CNY can qualify for preferential loan terms from Chinese banks operating in Lusaka.

Fiscal Impact on the Zambian Government

• Revenue projection: The World Bank estimates an additional US$120 million in tax revenue by 2027 through reduced conversion costs and increased compliance among Chinese‑owned mines.
• Exchange‑rate management: The Bank of Zambia will hold a dedicated yuan reserve pool (≈ $500 million) to manage liquidity and stabilize the exchange market.
• Openness boost: Real‑time reporting through the e‑tax platform now includes a built‑in CNY‑to‑USD conversion widget, minimizing discrepancies.

Benefits for Chinese Mining companies

• Lower transaction fees: Paying directly in yuan cuts SWIFT and intermediary bank charges by up to 45 %.
• Simplified accounting: Aligns tax obligations with corporate reporting in CNY, reducing currency‑translation adjustments.
• Strategic incentives: Eligible for a 2 % royalty rebate on copper exports that are shipped to China under the “Belt‑and‑Road Mining Corridor” agreement (signed March 2024).

Practical Tips for Zambian Mine Operators

• Set up a yuan bank account: Major Zambian banks (e.g.,standard Chartered Zambia,Zambia National Commercial Bank) now offer CNY‑denominated accounts with competitive foreign‑exchange spreads.
• Use the e‑Tax portal: Upload tax filings in either USD or CNY; the system auto‑calculates the equivalent amount based on the mid‑day Bloomberg CNY/USD rate.
• Hedge currency risk: Consider short‑term forward contracts through local brokers to lock in rates for large tax payments.

Case Study – copperbelt Mine “Kafue Copper Ltd.”

Item	Traditional (USD)	Yuan‑Based (CNY)	Savings
Annual royalty (USD 5 M)	USD 5 M	CNY ≈ 36.5 M (USD 5 M @ 7.30)	–
Transaction fees (USD 150 k)	USD 150 k	CNY ≈ 0 (direct settlement)	USD 150 k
exchange‑rate loss (average 3 %)	USD 150 k	CNY ≈ 0	USD 150 k
Total net benefit	–	–	USD 300 k per year

Source: Kafue Copper Ltd. internal audit, 2025 Q2.

Potential Challenges & Mitigation Strategies

• Regulatory familiarity: Some local accountants lack experience with CNY accounting standards. → Solution: Ministry‑sponsored training workshops (quarterly, Lusaka).
• Liquidity constraints: Limited yuan cash flow may strain smaller operators. → Solution: Access to China Advancement Bank’s Yuan Credit Line (up to $20 million per project).
• Exchange‑rate volatility: Sudden shifts in CNY/USD could effect budgeting. → Solution: Adopt a dual‑currency budgeting model to forecast under both scenarios.

Regional Implications & Future Outlook

• Spill‑over effect: Neighboring mining hubs (DRC, Angola) are monitoring Zambia’s policy; early talks suggest a potential Southern Africa yuan‑tax consortium by 2026.
• Investment pipeline: The international Monetary Fund projects a 15 % increase in Chinese FDI to Zambia’s mining sector over the next three years, driven by the tax convenience.
• Long‑term currency strategy: Analysts from African Development Bank predict that yuan adoption could eventually position Zambia as a benchmark for choice reserve currencies in the continent’s extractive industries.

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References:

1. Ministry of Finance,Zambia – “Mining Tax Amendment Act 2025,” official gazette (Jan 2025).
2. World Bank,Zambia economic Update 2025,Chapter 4 – “Foreign‑Exchange Diversification.”
3. international Monetary Fund, Regional economic Outlook – Sub‑Saharan Africa (2025).
4. Kafue Copper Ltd., internal Audit Report Q2 2025.
5. Africa Development Bank, China‑Africa Trade Dynamics (2025).