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AMN - Namibia scraps empowerment requirement – comment by Yolanda Torrisi

Yol headshot May 2011

Namibia’s government has taken an important step to encourage growth of its mining sector by removing the requirement for partial black ownership and management of companies seeking mining exploration licences. The move has been warmly welcomed by the mining industry.

Mines Minister Tom Alweendo announced this month that the requirements had been set aside, saying: “Our objective is to grow the mining sector where it can continue to meaningfully contribute to our socio-economic development. This can only happen when more minerals are discovered and it is important that we make the progress of mineral discovery as effective as possible.”

Under the policy, the management structure of a company applying for an exploration licence was required to have a minimum 20 per cent representation of black Namibians. At least five per cent of the company also had to be owned by Namibians or by a company wholly-owned by Namibians.

Mining contributed 12.2 per cent to the country’s gross domestic product in 2017 and the sector employed around 16,900 people, or 2.5 per cent of the workforce.

Namibia produces diamonds, uranium and other mineral resources, but a three-year recession has pushed the government into relaxing the rules in the hope of attracting more investors. There is a strong focus on lithium exploration at present.

Chamber of Mines chief executive officer Veston Malango welcomed the reversal of a policy introduced in 2015 that he says was basically forcing Namibians to buy into debt. Critics of the policy also said it threatened the ability to attract investment into the lucrative mining industry.

Malango explained that local empowerment rules have not been scrapped, but that instead, the Minister has only removed the additional conditions attached to the granting of exploration licenses.

“We don’t want to empower Namibians with debt, because until you make a discovery, debt is all an exploration licence is,” he said. “We want to empower Namibians with the real thing. We have been discussing this matter with the minister for about three years now and we explained to him how unpractical and counter-productive the policy is.”

Chamber president Zebra Kasete told the media that the chamber welcomed the final resolution to this matter that had been pending for more than three years. “Exploration is high-risk, with no guarantee of the discovery of a deposit. It is, therefore, high-risk debt,” he said.

Kasete said the Minister had retained some conditions for mining licences since empowerment at this stage was mostly based on established mineral deposits, which were “low-risk and practical”.

The organisation’s president added that the mining industry was committed to an empowerment framework through the mining charter of the Chamber of Mines, which was endorsed by the mines ministry.

He said the mining charter would be incorporated in the upcoming National Equitable Economic Empowerment Framework (NEEEF) law.

Chamber vice-president Hilifa Mbako is reported as saying that the decision “was the most important fundamental decision for future investment into Namibia.”

- Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the continent. Contact: yolanda@yolandatorrisi.com