The Chamber of Mines says the proposed introduction of government-free shareholding in the mines will be an additional cost burden to mining companies as they would have to finance the government’s shareholding.
The chamber also raised concerns about the new Namibia Investment Promotion and Facilitation Bill, formerly the Namibia Investment and Promotion Bill (NIPA).
According to the chamber, if approved in its current form, NIPA would add another bureaucratic hurdle for investors, who must register and get approval from the trade ministry.
Namibia’s mining industry currently has one of the highest effective tax rates globally, and research indicates that further tax increases could render projects and mines economically unfeasible.
As such, Chamber of Mines president Zebra Kasete says the proposed introduction of government-free shareholding in the mines means mining companies would have to finance the government’s shareholding.
Zebra Kasete says the chamber advocated that the executive directors of the mines and finance ministries and the chamber deliberate the matter at a technical level to fully understand and clarify the implications of the proposed free carry.
Mines minister Tom Alweendo announced the government’s intention to introduce a free carry shareholding held by the state during his address to parliament on March 1, 2023.
Alweendo also said it during a Parliamentary Standing Committee on Natural Resources workshop in June 2023 in Swakopmund.
Kasete said Alweendo’s announcement during the workshop drew the attention of local and international media, causing substantial turmoil in Namibia’s investment sentiment.
He said companies with projects in Namibia, listed on the Australian and Canadian stock exchanges, saw a sharp decline in share prices, fuelled by widespread panic that a government-free carry would be introduced imminently.
“If not correctly handled, the proposed mandatory government shareholding threatens to undermine the economic viability of existing mines and future projects,” Kasete said during his address at the chamber’s annual general meeting on Wednesday in Windhoek.
Kasete revealed that the chamber also engaged the mines ministry in February 2023 regarding the draft Minerals Bill.
He said the chamber is concerned with the bill’s proposals to raise the upper royalty rate limit for base and precious metals, nuclear fuel minerals, dimension stones, and industrial minerals, introduce a windfall corporate tax, and incorporate Mining Charter provisions into the legislation.
According to Kasete, the Mining Charter becomes effective when the New Equitable Economic Empowerment Framework (NEEEF) is finalised.
The mines ministry will enforce the charter as regulations under the NEEEF.
“Implementing the Mining Charter in both NEEEF and the new Minerals Act would not be practical,” Kasete said.
He said the chamber and the mines ministry are still reconciling their positions on these matters and addressing various follow-up items from the workshop.
After over twenty years of review, they aim to conclude consultations on the draft Minerals Bill 2024, move towards its implementation, and finalise associated regulations.
Kasete says that under the new Namibia Investment Promotion and Facilitation Bill, formerly the Namibia Investment and Promotion Bill (NIPA), approval may come with extra conditions, even after obtaining the mining licence and environmental clearance certificate.
He said this resembles the original version of NIPA, which the chamber had previously expressed similar concerns about.
Kasete said the chamber discussed the new bill with the trade ministry and was told that the most recent version aims to avoid creating more red tape for investors by requiring another set of approvals.
“It was clarified that the Business and Intellectual Property Authority (BIPA) is adequate for this matter, that mining companies must register their business and
that the licencing process stays with mines ministry,” he said.
The chamber succeeded in advocating for abolishing the proposed Road Fund Administration Amendment Bill, which sought to eliminate the fuel levy refund system.
The fuel levy for mining machinery that does not use public road infrastructure would not have been refunded, negating the “user pay” principle of the Act.
“The minister officially conveyed this decision in a letter to the chamber on March 17, 2023.
The RFA has yet to make a definitive statement regarding the RFA Amendment Bill,” Kasete said.
He added that substantial operational costs would have been imposed on the industry if the amendment had been passed.
