Zambia will set up a new entity for investment and trading in minerals as it seeks to earn more from its natural resources, the Cabinet said on Wednesday after giving its approval.

The government of Zambia, Africa's second largest copper producer which currently owns several mining assets through ZCCM Investment Holdings, will establish a Special Purpose Vehicle (SPV) for investment and trading purposes, it said.

The new entity would help Zambia "move away from the dividend payment model for mineral resources and adopt a production-based sharing mechanism to ensure benefits accrue to the people of Zambia beyond Statutory obligations," the Cabinet said.

The new business model would allow for sharing of minerals produced as well as enable the government to negotiate mineral prices and ensure the correct declaration of mineral consignments designated for export and domestic use, it added.

ZCCM has interests in mines including those owned by Vedanta Resources and First Quantum Minerals.

It recently sold a 51% stake in Mopani Copper Mines to a unit of United Arab Emirates' International Holding Company, retaining the remainder.

In February, mines minister Paul Kabuswe told Reuters Zambia planned to negotiate larger holdings in new mining projects as it seeks to raise its revenue and boost spending by investors on social projects.

The country, which produced 698,000 metric tons of copper in 2023, down from 763,000 metric tons the previous year, is targeting 3 million metric tons in annual output within the next decade as demand for the metal used in the electricity and construction industries rises.

(Reporting by Chris Mfula, writing by Nelson Banya and editing by Elaine Hardcastle)