An overview of extractive mining industry in Namibia. Presented in Lusaka October 2012

1. Presented by Andre le Roux

2.  Small upper-middle income
 Covers 825,418 km²
 Namibia’s GDP estimated at U$12.3 billion in
2011
 Population of 2.3 m
 World’s 122nd largest economy
 Mining is one of the largest contributors to
Namibia’s economy
 Extractive or mining industry – N$ 12 billion
in taxes and royalties, in the last decade

3.  Generated N$8.6 billion (+/- US$ 1 billion)
 Contributes 9.5 % to GDP
 Namibia’s GDP is N$ 90 billion
 Diamond mining consisted of N$ 6.5 billion
 Other mining and quarrying = N$ 2 billion

4.  2009: Exports for mining sector reached
N$ 10.9 billion (US$ 1.3 billion)
 That accounts for 44% of Namibia’s total
merchandise exports.
 Trends:
 Dominance of diamonds from the 1990’s
and the decline in recent years.
 Small contribution made by other minerals
 Importance of metal ores, including
uranium, reflecting increased levels of
uranium oxide production.

7.  Rough diamonds
 Uranium oxide
 Special high-grade zinc
 Acid‐grade fluorspar
 Gold bullion
 Blister Copper
 Lead concentrate
 Salt
 Dimension stone
 Exploration in Oil & Gas and Rare earths-minerals
 Phosphate mining also planned but met with
resistance due to fears of the impact it may have on
marine life and the environment

9.  Rio Tinto
 Rossing Uranium
 Paladin Energy’s Langer Heinrich Uranium mine is
in full production and expansion of phase 3.
 5t largest producer of uranium globally with total
production in 2011 coming in at 3 258 tonnes, or
about six per cent of the world’s total production
 (World Nuclear Association)

10.  Areva -Trekkopje
 Bannerman – Etango
 Forsys – Valencia
 Husab - China Guangdong Nuclear Power Corp (2014)
 Note: Because of current uranium prices analysts believe that Husab is
the only uranium exploration project that, due to the size and ore grade
of the deposit, will be developed into a mine in the near future.
 If the price of uranium reaches US$ 70 or above, then only will it become
economically feasible to develop other, smaller deposits such as
Bannerman's Etango and Deep Yellow's Omahola projects

11.  De Beers, Government of Namibia through
Namdeb Holdings in a 50:50 joint venture,
produces some of the world's finest gem
diamonds. Namdeb's output increasingly comes
from under the sea, thanks to the technical
expertise of De Beers Marine Namibia.
 Ranks 9th in the world
 Namibia produced just over 1% of the world’s
diamonds by weight but 6% by value.
 Namibia’s diamonds continued to be of the
highest average value of the top producing
countries

12.  AngloGold Ashanti produces gold bullion at Navachab Mine near Karibib
(2 013 kg: 2011)
 The Otjikoto-project being developed by Canadian company B2Gold –
expected to commence construction 2014
 Rosh Pinah Zinc Corporation, with Glencore and Namibian Investors as major
shareholders, own the Rosh Pinah mine, producing zinc and lead
concentrates.
 Weatherly Mining Namibia operates the copper mines Otjihase and Matchless
 Namibia Custom Smelters, wholly owned Dundee Precious Metals produces
blister copper at the Tsumeb smelter, from imported copper concentrates.
 Okorusu Fluorspar, owned by European chemicals, pharmaceuticals and
plastics giant Solvay, is one of the world's largest producers of acid‐grade
fluorspar.

13.  Mining Claims – Available to Namibian citizens only and concern small-scale mining
operators. Duration of three-years, with a further two-year extension a possibility.
 Reconnaissance Licence – These licences are granted for six-months, with possible
extension of another six-months, for the purpose of conducting a preliminary
exploration of a considerable expanse of land in order to determine where prospecting
should be focused once an exclusive prospecting licence (EPL) has been obtained.
 Exclusive Prospecting Licence (EPL) – Licence as being “available to enable the systematic
prospecting of areas up to 1,000 km2 for a period of three years with the possibility of
up to two two-year extensions provided sufficient progress can be demonstrated”.
- Applies to minerals
 Mining Licence – This licence is valid for 25 years “mining licences are granted to
applicants who can show sufficient technical and financial capacity to develop and
operate a mine.” A licence holder also has the right to “approve the development of
other mines on the same area”.
 Mineral Deposit Retention Licences – Retain prospecting and mineral rights without
further obligations

14. Three types of licences:
1. Reconnaissance Licence
2. Exploration Licence – Applies to petroleum
3. Production Licence

15. With regard to the provisions of this Act the following
licences can be applied for to the Minister of Mines and Energy:
(a) a diamond dealer’s licence entitling the holder to carry on
business as a buyer, seller and exporter of unpolished
diamonds;
(b) a diamond cutting licence entitling the holder to polish
diamonds for the purpose of business or trade;
(c) a diamond tool-making licence entitling the holder to set
unpolished diamonds in tools, implements or other articles or to
crush or to alter those diamonds for the purpose of trade;
(d) a diamond research licence entitling the holder to conduct research
and tests in connection with diamonds, but not to polish diamonds
for the purpose of business or trade.”

16.  Before independence – South African dominated all sectors of
economy
 SA dominance had dwindled - Mining sector now dominated by
multinationals – China, France, Australia, Canada
 GRN not content with this development
But:
 Locals do not always possess the expert skills or capital required
to undertake large scale long term exploration and mining
activities and thus, through an informal undertaking between
authorities and mining companies, have to largely settle for
passive minority stakes in exploration and mining activities.
 EL’s for locals issued – farm-in international partners to carry
burden
 Aim: to give Namibians opportunity to gain experience in oil and
gas industry…to continue further when discovery is eventually
made

17.  In practice:
 Speculative trade in Els
 “Fronting” – where locals had no substantial input before
cashing in
 Epangelo:
 GRN enacted the Strategic Minerals Act which created the
Epangelo mine company.
 I.t.o the act Epangelo would own all strategic minerals
Strategic minerals - all minerals except fluorspar and zinc
Not law yet.
 Trend has emerged where private companies negotiate
with Epangelo in good faith - shares Companies not
compelled - Strategic move to safeguard their future
ownership

18.  “…the risk of corruption lies not only in the flow of revenues from
contracts and licences, but also right at the start, when extractive
companies are granted access to these licences and contracts. Too often
private ‘shell’ companies with opaque ownership structures are awarded
lucrative concessions, with little information available as to who the
beneficial owners of the company are, how much (if anything) the
company has paid for the licence, and what the country has gained in
return.
 “If these companies do not have the technical capacity or financial
resources to develop the asset themselves, they may end up being
carried by international and national operators. Alternatively, they may
squat on lucrative concessions by acquiring them from government
before ‘flipping’ them quickly to other investors who actually have the
capacity to develop the licence.
Rigged? The scramble for Africa’s oil, gas and minerals, Global Witness,
January 2012.

19.  Currently licensing is statutorily done on the
basis of an open invitation to anyone to apply
for a specific licence.
 Authorities are looking at introducing a
bidding system in respect of petroleum
exploration licences.
 A closed-bidding system is being considered

20. References:
 Bank of Namibia Quarterly Bulletin September
2011
 Institute for Public Policy Research: On a slippery
slope: Corruption and the extractive industries in
Namibia.
 IJG Securities: Namibia's Export Performance
October 2012
 Chamber of Mines, Namibia