LUSAKA, Aug 7 (Reuters) - Zambia's proposed minerals

regulation law could deter investment and deliver a "fatal blow"

to its goal of raising annual copper output to 3 million metric

tons, two mining bodies said on Wednesday.

Zambia, Africa's second biggest copper producer, is

proposing a Minerals Regulation Commission Bill that would allow

the government to acquire a shareholding in exploration areas

before licences to search for minerals including copper are

granted to investors.

The proposed law, seen by Reuters on Wednesday, seeks to

give the nation's minister of finance the right to maintain a

shareholding in a mining license on behalf of the government if

minerals are discovered.

But Zambia's Chamber of Mines (ZCM), the main mining

industry body, and the Association of Zambian Mineral

Exploration Companies (AZMEC) said in a joint statement some

parts of the proposed law "will drive up the perception of

investment risk" in the country.

"(With) the prospect of forced 'free carry' acquisitions by

the state of stakes in new ventures, this Bill will seriously

undermine property rights," the mining industry bodies said.

Zambia's mines ministry was not immediately available to

comment.

President Hakainde Hichilema's government is seeking to

attract more investors to boost copper output to about 3 million

tons over the decade.

Copper output slumped to 698,000 tons in 2023 from 763,000

tons the previous year, according to data from the ZCM.

Barrick Gold ( GOLD ) and First Quantum Minerals ( FQVLF ) are

among investors that have outlined major expansion plans to

boost copper output in Zambia.