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

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

to plans to raise annual copper output to 3 million tons, two

mining bodies said on Wednesday.

Zambia's government has proposed a new Minerals Regulation

Commission Bill, which seeks to "regulate and monitor the

development and management of mineral resources" in Africa's

second-biggest copper producer.

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 Zambia".

"Unfortunately, due to...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.

"The Bill also grants unaccountable and arbitrary

discretionary decision making powers to individual regulators,

which present obvious future corruption risks," they added.

Zambia's mines ministry was not immediately available to

comment.

President Hakainde Hichilema's government, elected in 2021,

has sought to repair the country's investment reputation and

ramp up copper production, which was impacted by the seizure of

Konkola Copper Mines from Vedanta by the previous administration

in 2019.

The new government has handed the company back to Vedanta as

it pushes to raise copper output to 3 million tons per year

within the next decade to take advantage of growing demand for

the metal, which is key to the global shift to cleaner sources

of energy.

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

tons the previous year, data from the Zambia Chamber of Mines

showed.

Mining majors such as Barrick Gold ( GOLD ) and First

Quantum Minerals ( FQVLF ) are investing billions of dollars into

their Zambian copper assets.

The United Arab Emirates' International Resources Holding

(IRH) has pledged to invest $1.1 billion to expand output at

Mopani Copper Mines after buying a 51% stake in the company

previously owned by Glencore.