Strong year for mining

Augetto Graig

The Chamber of Mines of Namibia held its annual general meeting virtually on 27 April, revisiting efforts to help government and its resilience to continue to grow through a difficult year marred by the continuing Covid-19 pandemic in Namibia. Demonstrating the consensus embodied by the industry organisation, all office-bearers were reappointed for another year, with president Hilifa Mbako and his two vice presidents, Irvinne Simataa and Zebra Kasete, retaining their positions uncontested.

Mining recorded growth of 13.6% last year, helping the national economy bounce back from a retraction of 8.5% in 2020 to achieve growth of 2.4% in 2021.

“Mining accounted for half of that,” Mbako said. The sector recorded profits amounting to N$928.4 million, despite 16.8% increased input costs. Corporate taxes hit more than N$1.5 billion, while over N$1.6 billion was paid in royalties and export levies amounted to almost N$232 million.

Safety first

The first item on the agenda was the announcement of safety-related achievements, during which Barcelona Tsauses, who heads the chambers’ safety committee, announced the annual safety winners: Namib Lead and Zinc, Reptile Mineral Resource and Exploration, Sperrgebiet Diamond Mining and Dundee Precious Metals, in their respective categories. Mbako also explicitly presented the industry consensus that vaccination is the best response to Covid-19, elaborating on mining companies’ efforts to ensure their staff are all vaccinated.

Mbako presented the industry consensus that Namibia needs to do more to become truly attractive for investment into mining. He said over the course of a turbulent 2021, regulatory mechanisms have deteriorated the national framework, which was once conducive for investment. He made reference the recent Fraser Institute report which said the decline on Namibia’s overall investment attractiveness was due to a significant decrease in Fraser’s Best Practices Mineral Potential Index.

Investor concerns

Mbako added that investors worry about Namibia’s contentious change of direction in terms of the sale and ownership of exploration licences, in which regard government is considering enforcing a 15% free carry for Namibians.

He also mentioned the lack of action to finalise the equivocal National Equitable Economic Empowerment Framework (NEEEF) legislation and the delayed and renamed NIPA (now called the Investment Promotion and Facilitation Bill). Both pieces of legislation could significantly impact investment and ownership of mines in Namibia.

Mbako added that previous inputs from the industry seem to have been disregarded in the latest pieces of draft legislation, including for the crucial Mineral Bill, intended to replace the longstanding Minerals Act of 1992. Minister of mines and energy Tom Alweendo agreed that the delay and prolonged uncertainty about the new legislation is unfortunate. He, however, bemoaned the fact that each time the legislation is revised, input from the industry highlights new problems.

“Effective consensus is where we put ourselves in each other’s shoes,” he said, adding that “you can’t always get what you want”. “We all agree that we need an attractive (mining) sector where investors feel secure,” he said. “But also, let us agree to disagree,” he added in response to Mbako’s statement of the chamber’s strong opposition to carried interest in mining exploration and development. “The complaint about how Namibians are not part of ownership in the industry needs to be addressed,” minister Alweendo insisted.

Development and production

Mbako praised government for reforms on value added tax which may provide incentives through refunds for active exploration in the country. One highlight from last year was an increase in exploration by 57.7%. Mining development highlights he listed included Namibia becoming a net exported of iron ore thanks to the initial 52 000 tons coming from Lodestones’ Dordabis project. The feasibility study for expansion of the project to deliver two million tons a year has been completed.

Trigon bringing its copper mine in Kombat to operation, Debmarine Namibia putting its N$7 billion flagship Benguela Gem to work and Namdeb prolonging its life-of-mine by 20 more years were other listed highlights.

In terms of production, Mbako made specific reference to a 5% increase in diamond production, the 15.7% increase in Rössing uranium output, 13.61% more lead concentrate from Trevali’s Rosh Pinah underground operations, 18% more gold production from B2Gold and 1% more from Navachab, and 784 tonnes of tin concentrate from AfriTin in Uis.

Practical worries

Practical concerns highlighted on behalf of chamber members included the Road Fund Administration’s proposal to abolish fuel levy refunds, the Electricity Control Board levy which adds no value to mines that produce their own electricity and, “of great concern is government’s preparedness to supply expanding uranium, central and southern mines with access to water for expansion”.

“Delivery of this commitment may be elusive for years to come,” Mbako said. Likewise, the chamber fears that government will not be able to fast-track its ambitious five-year plans for green hydrogen, which the mining industry fully supports, according to Mbako.

Alweendo said green hydrogen development is spurred on thanks to great interest from the rest of the world. “The European Union, and others, want to sign memoranda of understanding with us,” he said. According to the minister, the link to the mining industry includes the effect of energy transition of certain minerals.

“These minerals become more valuable. Some of these critical minerals we have. Should we treat them differently because they are becoming so important?” he asked.

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