FOREWORD

Tom Alweendo

Minister of Mines and Energy: Namibia



The mining sector plays a pivotal role in the Namibian economy. It is a sector with a long history, starting with people from Northern Namibia smelting copper deposits around the Otavi/Tsumeb area in the 1850s, to make farming implements. Diamond mining started in 1908 when a railway worker picked up a diamond.

Today the mining sector contributes 14% to the gross domestic product (GDP) and directly employs over 16 000 workers. In 2019 the sector contributed over N$3bn to the Government coffers through taxes and royalties; and bought goods and services from the local economy in excess of N$13bn. These numbers confirm the importance of the mining sector.

Given the prominence of the mining sector, it is thus important to ponder about the future of the sector. For example, for how long will the mining sector continue to be an important contributor to the economy? One thing that must be remembered is the fact that mining deals with finite resources – resources that once depleted cannot be replaced. It is therefore of critical importance that mining is undertaken in a sustainable manner.

For any mining operation to take place, a mineral deposit must be found. Not only one must find a mineral deposit but such deposit must be of a certain quantity and quality to make economic sense. It is therefore important for us to have a good understanding of what minerals do exist and in what quantity and quality. It is for this reason that as a Government we will continue to invest in the necessary skills to ensure that we have current geological maps that will make it possible to identify potential mineralization.

Another factor that is important for the future sustainability of the mining sector is the mining legal framework under which mining activities take place. You cannot sustainably manage an important sector such as mining without an effective mining legislation, that regulates the conduct between the State and the investors; and between the citizens and the investors. As we all know, there are good laws and there are bad laws. We also know that at times a law is characterized as bad or good depending on whose interest is affected.

A good law is that which is able to strike a balance between the varied interests of all the stakeholders; a good law is that which does not unfairly and unreasonably favor a particular stakeholder because of a perceived strength of such a stakeholder. Our mining law must be flexible enough to recognize the ever-changing mining environment brought about by technology and by the international market nature of minerals.

Given the economic importance of mining, it is to be expected that the citizens will be interested in knowing to what extent are they benefiting from their natural resources. As important stakeholders, they are - rightly so - interested in aspects such as the ownership structure of mining companies and the fact that minerals are exported mostly in raw form.

The question of ownership is an important one. Currently all mining companies are owned by foreign investors. Investing in profitable economic assets, such as mining companies, rewards the investors through dividend. In turn the assets owners will reinvest their earned dividend in the economy – typically not in the host economy but in the country of origin. It is unfortunate that some foreign investors mistakenly view the issue of local ownership as an irritant and something that can be wished away. There is a legitimate expectation for local ownership and the sooner we address this concern, the better it is for the future sustainability of the mining sector.

With regards to value addition, of concern is that we are exporting most, if not all, of our minerals in raw form instead of adding value to them. This means that we are exporting local jobs while we have a problem of growing unemployment. This is not new and we have all agreed that more efforts need to made by both the Government and mining sector to add value to our minerals. To this end there is a willingness from the mining sector to join the Government in ensuring that, where economically feasible, value is added to the minerals before they are exported.

Going forward, the stakeholders need to continue to collaborate in making sure that we attract added investment in the sector. Equally, the stakeholders must continue working together in making sure that we sufficiently leverage the mining sector in strengthening the productive capacity of the economy.