Andimba Toivo Ya Toivo, Minister of Mines & Energy, assesses one of Namibia's key motors for future growth

The mining sector is crucial to Namibia's economy. How has the sector developed in recent years, and what plans do you have for its future?

It is important to emphasise that mining has continued at reasonable levels since 1990 because of Namibia's political stability and acceptable management practices. To maintain and improve the levels of base metal production in Namibia, additional ore reserves must be identified and developed near established infrastructures. The Khusib Springs deposit is being evaluated as an alternative short-life high-grade source to feed the Tsumeb copper lead smelter. The Haib Copper deposit is being developed and will provide for an expansion in base metal production. Although the traditional raised beach deposits are nearing depletion, the production of rough diamonds has maintained a reasonable level since 1990. This has been attributed to the commissioning of new on-shore mines (Auchas and Elizabeth Bay). Off-shore mining of diamonds from the seabed shows great promise: off-shore recovery accounted for 30 per cent of total diamond production in 1995, and will increase. Despite declining international demand, the production of industrial minerals has increased since 1990; industrial minerals contributed nearly 2 per cent to total mineral export revenues in 1994. The future is promising, particularly with the expansion of a plant to process long fibre wollastonite product for export markets. The long-term option is to increase the contribution of industrial minerals within the range of 10 per cent of total mineral export revenues.

The uranium mining sector saw heavy losses in 1991 and 1992 because of oversupply from eastern Europe. In 1993 the world uranium market stabilised and Namibian uranium output grew by about 13 per cent in 1993-94. This was attributed to high sales commitments, including deliveries under a long-term contract to supply Electricité de France (EdF) with a total of 5,200 tons. This has increased output to around 2,200 tons a year - about 70 per cent of national uranium capacity production, which is 3,000 tons a year. The future of the uranium mining industry is therefore bright.

Mining of semi-precious stones has been at a low level since 1989, and is likely to remain so as a result of the difficulty of penetrating international markets and the limited local market. The percentage contribution to overall mining revenues has remained at 1 per cent since 1989.

What incentives does Namibia offer potential investors?

The key to Namibia's attractiveness to foreign investors is its political stability, together with the government's commitment to free-market economic principles. In addition, the country boasts a developed transport infrastructure, with good railways, roads, harbours, telecommunications and air transport.

The government also aims to create an attractive investment environment for local and foreign entrepreneurs, reflecting its strategy of promoting sustainable economic growth through partnership with the private sector. The government has introduced legislation to guarantee both a consistent fiscal policy to encourage long-term investment decisions and an attractive investment environment. A foreign investment code has been enacted and a private sector investment conference was held in Windhoek in 1991.

The 1990 Foreign Investment Act set the legal framework within which investors can operate in Namibia, assuring foreign investors equal legal status and tax treatment with locally-owned or domiciled businesses. It also guarantees access to foreign currency for the conduct of business as well as recourse to international arbitration in the case of disputes.

Investors may also be eligible for a Certificate of Status Investment. This certificate may be issued to investors for projects that show particular benefits to the economy through, for example, the provision of training. The certificate guarantees the availability of foreign exchange from the Bank of Namibia.

Foreign nationals may invest and engage in any business activity in Namibia; although the government encourages active participation by Namibians in new ventures, there is no obligatory minimum equity stake for foreign nationals. Similarly, no foreign investor is obliged to offer participation to the government in any proposed venture.

Exceptions may be made in cases where licences or other authorisation for the grant of rights over natural resources are required; however, in the case of mineral licences, the 1992 Mines and Minerals Act specifies that a government interest may be acquired only as a result of negotiations for a non-obligatory mineral agreement, entered into solely at the behest of the investor. An integral part of the 1990 Foreign Investment Act was the establishment of an Investment Centre a one-stop investment advisory and information agency with facilities for: The Investment Centre publishes a quarterly magazine, The Investor, containing informative articles on investment opportunities, as well as details of regulatory aspects and official, non-governmental and commercial contacts in the country.

Namibia is a signatory of the Multilateral Investment Guarantee Agency (MIGA), which provides insurance cover for international investors against, for example, political risk, currency transfer problems and expropriation. Namibia has also signed a bilateral agreement with the Private Investment Corporation of the US, which provides financing and risk insurance with the backing of the US government. Similar facilities are provided by comparable agencies of other industrial countries which trade with Namibia.

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Are you satisfied with the rate of foreign investment in the mining sector?

Despite the negative influence of depressed mineral and metal prices, the rate of foreign investment in the mining sector in Namibia has been encouraging since 1990. Four opencast mines (Navachab, Otjisondu, Elizabeth Bay and Auchas) have been brought into operation. The Orange River Exclusive Prospecting Licence Area has been made available for diamond exploration. Off-shore diamond exploration increased in both shallow and deep waters between Walvis Bay and Orange River.

Prospecting for precious and base metals continued to cover the central zone, west of Okahandja, near the Navachab gold mine, the Matchless belt to the east and west of Windhoek, the Otovi Mountain land, to the east and south-east of Swakopmund, and the area to the north of Rosh Pina Mine. The intention is to extend the ore reserves of existing mines or to find new deposits to increase mineral production.

Prospecting expenditure based on data released by the Chamber of Mines of Namibia fluctuated between N$30 million and N$67 million during the past five years. The fluctuation was attributed to several factors such as changes in metal prices, recession and the weak market.

The environmental lobby is wielding increasing influence in the mining sector. What steps have you taken to limit the environmental impact of mining activities?

The government seeks a practical balance between genuine environmental concerns and the operational realities of the minerals industry. Within the framework of ensuring minimum environmental impact, the government:

How hopeful are you of significant off-shore oil finds in the near future?

Drilling and seismic results show that good oil-prone source rocks are present off-shore. Reservoir rocks are also present, for example the sandstones in the Kudu gas fields. There is therefore no reason why oil should not be found off-shore, particularly given several oil finds off the coast of South Africa and Angola.

Do you see the opening up of South Africa and the coming of peace to Angola as significant threats to the development of Namibia's mining industry?

It is important to note that Namibia, South Africa and Angola are all members of the Southern African Development Community (SADC) . The three countries have well-established mineral industries and a well-known significant mineral potential. The government fully accepts that some mineral development policy issues are common to the region, and need regional co-operation for the mutual advantage of member countries. The government therefore seeks close co-operation with neighbouring states to develop the minerals sector in Namibia. To that end, the government will:

How do you see the mining industry's future development?

The future of the mining industry in relation to the economy as a whole is determined by many factors, such as strong demand for minerals/metals on world markets, an improvement in the global economic environment, increased consumption in industrial countries and the size of stockpiles held by private investors, central governments, producers, consumers and metal exchanges.

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©Kensington Publications 1996