India has restarted negotiations with Zambia over investments in copper and other critical minerals as New Delhi turns to foreign countries to secure the supply of raw materials needed by the fast-growing economy and renewable energy industry of India.
Sources said that the officials of India’s Ministry of Mines had held initial discussions with their Zambian counterparts on August 26, as per two sources close to the talks. The renewed discussions followed months after earlier negotiations fell through due to disagreement over mining rights.
The move emphasizes the rising importance of Zambia’s mineral wealth in securing supplies of critical minerals such as copper and cobalt needed in manufacturing and renewable energy production.
Why is India Turning to Zambia for Copper?
The demand for copper in India is growing, as the country is expanding its manufacturing, infrastructure, and green energy industries.
Copper is extensively used in electricity production equipment, electricity networks, green energy facilities, electric cars and electronics, and thus the availability of copper becomes vital for India’s industrial policy.
The country also became increasingly dependent on imports after Vedanta’s Sterlite Copper smelter closed down in 2018. According to Reuters, India will need to import 91-97 percent of its copper concentrates by 2047.
Thus, New Delhi sees having mining assets abroad as a way to protect itself from foreign supply chain disruptions and build its industrial capacity.
What Happened with the Previous Deal Between India and Zambia?
The recent attempts come after previous failed negotiations.
India was trying to get some guarantees from Zambia regarding the mining rights in an area of 9,000 sq.km that would be allocated to India.
Those guarantees were not achieved, and the negotiations fell apart earlier this year. As per Reuters, New Delhi tried to revive the negotiations in April.
There are no indications that the halted project was up for discussion at the most recent August 26 meeting, which implies that both India and Zambia may currently be searching for new areas to invest in as opposed to addressing the previous conflict.
What Are Zambia’s Gains With Indian Investments?
In terms of Zambia, any increase in investments by India will offer the country more money and technology in order to advance its mining operations.
Zambia, being the second-largest producer of copper in Africa after the Democratic Republic of Congo, aims to have 3 million metric tonnes of copper produced annually by 2031.
Zambia has been looking for foreign investors to assist it in meeting its target.
Zambia could benefit greatly by having more competition among international investors due to the search for alternative mineral supply chains.
India Is Looking Beyond Zambia
India’s mineral policy is not exclusive to Zambia.
Khanij Bidesh India Ltd (KABIL), a company sponsored by the Indian state responsible for securing mineral resources abroad, is evaluating the potential of Australia, Brazil, Canada, Russia and Indonesia among others.
Moreover, India has also been pursuing mineral opportunities in Malawi and making government-to-government deals with mineral-rich African nations such as Zambia and the Democratic Republic of Congo.
This is because the government in India is trying to create a more diversified network rather than depending on a few foreign sources of mineral resources.
Why are Critical Minerals turning out to be a global race?
Minerals like copper have become increasingly important due to investments made by different countries in electric vehicles, renewables, batteries, data centers, power grids, and the manufacturing industry.
This means that mining has become a very strategic matter for many nations.
Nations like the United States, China, and India are all trying to gain greater control over the mineral supply chain of minerals.
Geographical position of Zambia and abundant resources of copper have made it a strategic partner. This nation has become a focus of global powers for their diversification of supply chains.
Therefore, this can prove to be an economic and strategic advantage for India.
What Could Be a Barrier for the India-Zambia Deal?
However, one big issue still exists – whether New Delhi will be able to guarantee enough legal certainty before the major investments are made.
Earlier discussions failed due to uncertainty regarding mining rights. Mining firms and government-controlled investors need to have guaranteed long-term access to the resource, as the development of mines and exploration require significant investments and may take many years to start producing.
According to the Federation of Indian Mineral Industries, investors must consider projects close to production (brownfield sites).
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