Zambia Accepts Yuan for Mining Taxes as Chinese Debt Shapes Currency Shift

A New Currency Option for Zambia's Mining Revenue

Zambia became the first African nation to accept Chinese yuan for mining taxes and royalties in October 2025, giving Chinese mining companies a way to settle their obligations without first obtaining US dollars. The Bank of Zambia's decision connects two central parts of the country's economy: copper exports to China and more than $6 billion in debt obligations to Chinese creditors.

For Africa's second largest copper producer, the change addresses an immediate financial problem. Zambia has faced acute shortages of US dollar liquidity, meaning dollars have been difficult to obtain when needed for payments. Accepting yuan gives the government another source of foreign currency that it can use to service Chinese loans.

The policy also changes how money moves between mining companies, the central bank and creditors. Chinese operators that receive yuan for copper exports can sell that currency to the Bank of Zambia for their tax payments. The central bank can then hold the yuan in its reserves and use it for obligations to Chinese lenders.

In December 2025, the Bank of Zambia began publishing official exchange rates between the renminbi and Zambia's currency, the kwacha, to support these transactions. Renminbi is the name of China's currency, while yuan is the unit used to express its value. Mining companies now have a choice between selling dollars or yuan to the central bank at the published rates.

The change has consequences beyond the mechanics of collecting taxes. It gives Zambia a practical way to connect the currency it receives with the currency it needs for debt payments, while advancing Beijing's ambition to expand international use of its money. The immediate benefit is lower conversion costs. The longer concern is how much exposure Zambia should take on to one currency and one creditor.

How the Rules Changed From 2018 to 2025

Zambia's new arrangement builds on a system introduced in 2018, rather than creating an entirely new method of collecting mining revenue. That year, authorities required mining companies to sell foreign currency to the central bank for mineral royalty payments. The rule specified US dollars and was intended to build government reserves during a mounting debt crisis.

Authorities broadened the requirement in 2020 to cover all mining taxes, while retaining the dollar requirement. The October 2025 change introduced the option of yuan, and the publication of renminbi exchange rates in December supplied the pricing needed to operate it.

• 2018: Zambia required mining companies to sell US dollars to the central bank for mineral royalty payments.
• 2020: Authorities expanded the arrangement to all mining taxes, still using dollars.
• October 2025: The Bank of Zambia announced that Chinese mining companies could settle mining taxes and royalties using yuan.
• December 2025: The central bank began publishing official renminbi to kwacha exchange rates.

Mining companies can now sell dollars at the published dollar to kwacha rate or yuan at the published renminbi to kwacha rate. The Bank of Zambia holds the foreign currency in its reserves, the pool of money available for international payments and other financial needs.

Why Matching Receipts With Debt Payments Matters

Chinese mining companies often receive renminbi when they sell copper to China. Under the new arrangement, those receipts can move into Zambia's reserves through tax payments and then be used to service Chinese loans. This creates a currency circuit linking exports, public revenue and debt service.

Zambia previously received dollars from miners and then converted money back into yuan for debt payments. Each conversion could involve banking fees and an exchange rate spread, the difference between the price at which a bank buys a currency and the price at which it sells it.

Using yuan directly removes those repeated conversions and saves money on transfers. For a government struggling to obtain enough foreign currency, reducing the cost of moving money leaves more available to meet its obligations.

Officials Present the Decision as Economic Pragmatism

Dr Charles Mak, a lecturer and assistant professor at the University of Bristol Law School, describes Zambia's decision as a response to financial pressure rather than political alignment. His explanation focuses on the practical value of accepting the currency of a major creditor and trading partner.

For a government under severe liquidity pressure, accepting the currency of its largest creditor and trading partner is a rational way to ease balance-of-payments stress, reduce transaction costs and manage debt service more efficiently.

Balance of payments describes the money moving between a country and the rest of the world. Zambia's shortage of dollars makes those international payments harder to manage. Receiving a currency that can be used for Chinese debt offers another route for meeting some of those commitments.

Mark Simuuwe, media director of the ruling United Party for National Development, also presents the policy as an economic response. He points to China's position as Zambia's largest bilateral creditor and a dominant buyer of its copper exports.

This policy position is a pragmatic, strategic and economically driven decision, anchored in Zambia's trade realities, debt profile, and the structure of its mining sector.

Simuuwe identifies two further benefits. Using yuan can reduce exposure to exchange rate movements during conversions, and it can cut transaction costs associated with clearing payments through third parties in New York. Those savings would affect both the government and private companies moving money through the system.

The government's reasoning brings trade and borrowing into the same calculation. Zambia sells copper into a market where yuan receipts are available, while carrying large obligations to Chinese creditors. Allowing those receipts to enter its reserves makes the payment process more direct.

Kenya and Ethiopia Show a Wider Shift

Kenya has taken a parallel approach through its borrowing rather than its mining tax system. It converted $5 billion of railway loans from the Export-Import Bank of China into obligations denominated in yuan, meaning the debt is expressed in China's currency.

Nairobi expects the conversion to save approximately $250 million annually by removing unnecessary currency exchanges. That expected annual saving is equivalent to 5 percent of the $5 billion in loans converted, illustrating the scale of the anticipated benefit.

Ethiopia has entered preliminary discussions about similar arrangements. Zambia has also indicated that it may convert additional debts to yuan. These developments point to a wider search for alternatives to obligations denominated in dollars among African countries facing persistent foreign exchange shortages.

China has become the largest trading partner for most African nations. It purchases the bulk of the continent's mineral exports and supplies infrastructure through its Belt and Road Initiative. As those commercial ties deepen, some countries are adapting their financial arrangements to the currencies used in their trade and borrowing.

Zambia's mining tax policy and Kenya's railway loan conversion address different parts of public finance. Zambia is changing the currency it can receive from companies. Kenya has changed the currency in which a group of loans is expressed. Both seek to reduce the need to move money through dollars before paying Chinese creditors.

What Beijing Gains From More Yuan Payments

China has pursued wider international use of the yuan for more than a decade. Its aims include reducing global dependence on the US dollar and protecting its financial sector from potential Western sanctions. More yuan payments in African mining and government finance support that strategy.

The yuan still accounts for less than 2 percent of global foreign exchange reserves. Its share in trade finance, however, has grown from roughly 2 percent to nearly 7 percent over the past five years. Trade finance covers the financial arrangements used to support international buying and selling.

Those figures show different levels of adoption. Central banks still hold a relatively small share of their reserves in yuan, while the currency has gained a larger role in financing trade. Zambia's arrangement connects the two by bringing yuan earned through commerce into the central bank's holdings.

Payment Networks Support the Currency Circuit

The African Export-Import Bank and South Africa's Standard Bank have already joined China's Cross-border Interbank Payment System. The system provides a route for businesses to settle transactions directly in renminbi, offering an alternative to the SWIFT network for those payments.

For African economies with substantial Chinese debt and commodity exports to China, the payment infrastructure helps make a direct currency circuit possible. Export earnings can move through financial institutions into government payments and debt service without passing through dollars at every stage.

Africa has become a testing ground for China's currency ambitions because those ambitions meet practical financial needs. Countries rich in resources but burdened by debt may have both a source of yuan receipts and a reason to spend them.

Zambia's arrangement shows how those conditions can fit together. Mining exports provide the receipts, the central bank collects foreign currency through the tax mechanism, and Chinese debt creates a use for that money. The attraction comes from matching existing financial flows more closely.

Reserve Management Becomes More Demanding

Zambia's lower conversion costs come with decisions about currency exposure. Greater reliance on Chinese money could deepen dependence on Beijing and limit future policy flexibility. The yuan is less convertible than the dollar, meaning it is less freely exchanged, and its exchange rate is influenced by Chinese policy decisions as well as market forces.

Large yuan holdings would also create concentration risk. In simple terms, that means keeping a substantial share of financial resources tied to one currency or economy. Access constraints in Chinese financial markets could make those holdings harder to use when needed.

Joseph Jalasi, a senior partner at Dentons' local unit in Zambia, says successful implementation depends on the central bank's reserve management policies and pricing mechanisms. Transparent operating guidance will be important for maintaining confidence among mining operators and international partners.

The Bank of Zambia must manage dollars and yuan together, balancing immediate payment needs against exposure to either currency. Resource dependent countries considering the same approach face a similar choice: how to capture savings from direct payments while retaining enough flexibility in their reserves.

No date was given for Zambia to convert additional debts to yuan, and Ethiopia's discussions remain preliminary. The next steps will depend on decisions about borrowing, payment arrangements and the capacity to manage more than one foreign currency.

Which Countries Could Follow Zambia?

Zambia's model depends on three conditions: substantial trade with China, significant debt obligations to Chinese creditors, and institutions capable of managing operations in several currencies. Countries with those features have a stronger practical reason to connect yuan receipts with public payments.

Ghana is a potential candidate because of its gold exports to China and growing infrastructure debt. Tanzania, which has substantial Chinese investment in its mining sector, could follow as its institutional capacity develops. Both represent possible extensions of Zambia's approach over the coming years.

The regional precedent gives other mining jurisdictions an example to examine. Its usefulness will depend on whether their export earnings, debt commitments and central bank operations fit the same pattern. A direct yuan payment route is most useful where governments already have obligations for which that currency can be used.

Mining Companies Face a More Complex Currency System

Canadian companies First Quantum Minerals and Barrick Gold produce roughly two thirds of Zambia's copper. They must now navigate a system that accommodates both established dollar payments and the new yuan option. For multinational miners operating across Africa, such changes create a need for stronger capabilities to handle several currencies.

Chinese operators, including China Nonferrous Mining, have a closer match between their financing, export receipts and tax obligations. A company receiving yuan for copper can use the same currency within the new payment arrangement, reducing the need for conversions along the way.

Copper prices have surged to their strongest annual gains since 2009, increasing the stakes around mining revenue and currency decisions. Competition for productive mining assets is intensifying, and the efficiency of tax payments could influence investment flows across the continent.

Zambia's decision therefore reaches beyond a choice of currency at the tax office. It affects how companies manage receipts, how the central bank builds reserves and how the government pays creditors. Its value rests on making those existing transactions less costly, while its durability depends on careful pricing and reserve management.

Key Points

• Zambia became the first African nation to accept yuan for mining taxes and royalties in October 2025.
• The Bank of Zambia began publishing official renminbi to kwacha exchange rates in December 2025.
• The option builds on mining payment rules introduced in 2018 and expanded in 2020.
• Zambia faces dollar shortages and more than $6 billion in debt obligations to Chinese creditors.
• Direct yuan receipts can reduce currency conversion costs when servicing Chinese loans.
• Kenya converted $5 billion in Chinese railway loans to yuan and expects annual savings of about $250 million.
• Ethiopia is discussing similar arrangements, while Zambia may convert additional debt.
• Reserve management, transparent pricing and exposure to China's currency remain central considerations.