Following a tender, the Bank of Zambia (BOZ) has extended metals miner First Quantum Minerals’ (FQM’s) contract to supply the central bank with refined gold for the next three years, building on a similar agreement that expired at the end of 2024.

FQM says this landmark agreement will strengthen the nation’s economic base and ensure a meaningful volume of gold produced by FQM subsidiary Kansanshi Mining at the Kansanshi mine will remain in Zambia.

“As we celebrate our achievements thus far, we look forward with renewed energy and higher aspirations that our partnership will yield even stronger results. We remain committed to collaborating closely with Kansanshi Mining, building on the mutual trust that has characterised our relationship from the outset,” says BOZ governor Dr Denny Kalyalya.

“In this partnership with Kansanshi Mining, we have so far bought about 2.8 t of refined gold. We look forward to buying more gold from your esteemed firm,” he told FQM executives.

Since the original contract began in 2021, FQM says it has sold 92 100 oz of gold to the BOZ; the equivalent of  61% of Kansanshi’s gold doré production during that time.

The company says the purchase of gold serves as a store of value and a prudent hedge against inflation, a common practice by central banks across the world.

Under the terms of the agreement, the amount of gold sold will be agreed quarterly, based on FQM’s kwacha requirements and anticipated gold production volumes at the Kansanshi Mining subsidiary in Solwezi.

The price will be based on the London Bullion Market Association rate, with payment in kwacha at the prevailing BOZ mid-rate. The agreement is governed by Zambia law.

FQM says it expects to produce 100 000 oz to 110 000 oz of gold at Kansanshi this year.

“We look forward to continuing this partnership and contributing to the Bank’s important efforts to grow Zambia’s gold reserves, and ultimately, to help shape a stronger, more self-reliant national economy,” says FQM Kansanshi Mining GM Meiring Burger.

Separately, FQM announced a streaming agreement with Royal Gold, a US-based precious metals investment company earlier this week.

FQM describes this agreement as a milestone for Zambia, receiving international recognition as a preferred mining jurisdiction.

Under this agreement, FQM notes that it received a $1-billion upfront payment in return for gold credits that will be delivered to Royal Gold over time, in an amount calculated on the basis of Kansanshi copper production.

Under the agreement, there will be no change in the royalties and taxes paid to Zambia and income to the country will remain intact.

No gold from Kansanshi will physically be sold to Royal Gold under the agreement and Kansanshi will continue to produce and sell copper and gold as normal.

As part of the agreement and Royal Gold’s commitment to Zambia, the company says it has agreed to contributing $4.5-million towards community and social programmes in the country during the life-of-mine of Kansanshi.

“The extension of the contract with BOZ demonstrates FQM’s ongoing commitment to Zambia’s economic resilience. Meanwhile, the streaming agreement between FQM and Royal Gold represents a strong indication of the confidence that international investors have in Zambia as an investment destination,” says FQM country director Anthony Mukutuma.

“This indirect investment by Royal Gold is the largest of its kind globally in the last decade, adding to FQM and Zambia’s financial resilience. It is a strong endorsement and encouragement for continued investment in Zambia as a leading mining jurisdiction globally,” he adds.