Related Stories By Felix Njini Published: 20120528
Nam miners, govt on collision course

Windhoek - Namibia’s Chamber of Mines believes that the government has no role to play in the country‘s mining sector apart from regulating the operating environment. The position is likely to put miners at loggerheads with the state, which is following the global trend of resource nationalism.

Namibia in 2011 declared all minerals - except zinc and fluorspar - strategic and handed over all exploration rights to state miner, Epangelo Mining Limited.

This means foreign investors must have partnerships with Epangelo if they want to exploit any mineral apart from zinc and fluorspar.

But on May 23, Chamber of Mines president Mark Dawe said the government had no business in the mining sector, and should be content to act as regulator and collect taxes, with – at most – a minority stake in actual mining.

Dawe said, “We are not opposed to the concept of state ownership of a minority shareholding in Namibia’s mining industry as a partner with private sector companies.

“But our studies have revealed that there has not been a single successful case in Africa of a majority state-owned mining company being operated successfully.

“Governments are regulators, not operators,” Dawe claimed.

He added: “Of course self-regulation is fraught with enormous challenges relating mainly to transparency and fairness, especially in the issuance of mineral licences.”

Namibia’s Mines Minister Isak Katali has stated that the government is shifting from being a mere “rent seeker” in the mining sector.

This has not pleased Dawe and the Chamber of Mines.

Dawe said, “The blanket issuing of ownership of most minerals and metals to Epangelo is not condoned as this will thwart investment in exploration, the life line of our industry.

“The near-term effect of this likely to be a reduction in exploration, the long-term consequences of which is a shrinking or elimination of the mining industry.”

The government has instituted a two percent levy on exports of unprocessed materials, but has backtracked on raising corporate tax to 42 percent from  the current rate of 37 percent.

Across Africa, Indonesia, Australia and Latin America, governments are raising equity in mining projects as they seek to secure greater benefits and value from extractive industries.

Analysts say high demand for African minerals and the influx of investors put governments in a better position to dictate how the mining sector is managed.

Analysts say the drivers of resource nationalism - such as revenue maximisation, supply chain development, and revision of historical contracts - are as clear as the motives that impel mining companies themselves, which are profit and shareholder dividends.

Observers have said foreign miners are better of negotiating with governments instead of fighting resource nationalism, because the trend is unstoppable.

“The only way to safeguard projects against the demands of more assertive governments is therefore to engage pro-actively in the resource nationalism debate.

“In this way we believe that despite investor concerns, the resource nationalism trend provides an opportunity for the mining sector to improve the long-term security of their mining projects, whilst playing a constructive and profitable role in African development,” mining analysts at London based advisory firm africapractice said recently.