Mines and Energy Minister, Tom Alweendo, has scrapped the controversial additional conditions on exploration mining licences that had threatened Namibia’s position as one of Africa’s top mining investment destination.
The additional conditions were introduced by Alweendo’s predecessor, Obeth Kandjoze, in 2015 as a way of increasing local participation in mining projects.
Alweendo wrote to the Chamber of Mines of Namibia last week informing its members that he had listened to their concerns and decided to scrape the conditions.
According to the scrapped conditions, the management structure of a mining entity should consist of a minimum 20 percent representation of historically disadvantaged Namibians and that at least 5 percent of the company shall be owned by Namibian persons or by a company wholly owned by Namibians.
Chamber Vice President, Hilifa Mbako, told the Windhoek Observer that the decision to scrap the additional conditions “was the most important fundamental decision for future investment into Namibia”.
“The minister has listened to the industry. The additional conditions were going to bring a lot of unintended consequences. Namibia will benefit from this decision.”
Mbako said the additional conditions and the uncertainties created by the New Equitable Economic Empowerment Framework (NEEEF) had badly affected investor confidence in Namibia.
Talk in the mining industry is that uranium company, Bannermann Resources, failed to meet conditions for a mining licence because of the additional conditions.
The chamber said in a statement that it was excited that all Additional Conditions pertaining to exploration licences had been dropped.
“The conditions posed serious challenges to exploration companies, but are plausible at mining licence stage. The final resolution to this long-outstanding matter is most welcome by the industry as it removes one of the main barriers to investment in exploration,” the chamber said.
It said the positive development should see further investment into exploration projects.
“Moreover, we are optimistic that this move will help improve Namibia’s attractiveness as a mining jurisdiction and investor sentiment.”
Results of the 2017 Fraser Institute Survey revealed that Namibia continues to deteriorate from its once prestigious position in 2014 as the most sought after mining investment destination in Africa.
The 2017 report highlighted that Namibia was ranked 6th in Africa in terms of its Investment Attractiveness Index.
Chamber CEO, Veston Malango, said in the 2017 Chamber of Mines Annual Report that the introduction of additional conditions to licences in 2015 had remained by far the biggest regulatory challenge faced by the industry since then.
“It is the elephant in the room and has not added any value to the original objective of poverty eradication through job creation and empowerment, especially for Exclusive Prospecting Licences (EPLs).”
The chamber has repeatedly affirmed that additional conditions were doable at mining licence application level, but impractical for EPLs.
“To place a condition for BEE empowerment to be concluded before an EPL can be granted is unrealistic and flies in the face of government policy to make Namibia an attractive investment destination for mining and exploration.”