Namibia’s mining sector: stable and mature
Namibia is not perfect, but the country has consistently maintained its position as one of sub-Saharan Africa’s primary investment destinations.
By Warren Beech
Namibia has a long, stable and mature mining industry, especially the diamond, zinc and uranium sectors. It has remained one of the top mining jurisdictions in Africa mainly because of the consistent interpretation and application of mining and environmental laws, political stability, and, importantly, infrastructure that works.
Namibia is regarded as one of the easiest countries to do business in. As a result of this, and of course, its significant mineral resources, which historically focused on diamonds, zinc and uranium (and some gold), and which now includes battery minerals, Namibia can make a substantial contribution to the transition to a green economy. As a result of these vast deposits of battery minerals such as cobalt, lithium, and copper, Namibia is well positioned to meet international demand for battery minerals. Namibia also continues to provide significant amounts of zinc to world markets.
Namibia is, of course, not perfect. For example, its power generation often outstrips demand which is often problematic for the mining industry. But overall, the country is not a high-risk investment destination. The Namibian government is not scared to take decisive action when investment is threatened.
Prospecting and exploration remain the lifeblood of all mining sectors, and when indigenisation laws, in relation to prospecting, created concerns amongst investors, the Namibian government withdrew the requirements, accepting that Namibians would ultimately benefit from prospecting and exploration, and the establishment of operating mines through Namibian ownership, royalties, and employment.
The Namibian government implements requirements that it believes will benefit Namibians. Namibia requires exploration and prospecting licence holders that are Namibian, to retain a stake, in the licence, preventing outright disposal to external companies and investors. Where non-Namibian companies have been granted licences however, the requirement for the Namibian licence holder to retain a stake, does not apply. The Namibian government has effectively balanced compromises with medium to longer term gains, for Namibians.
Namibia moves into a green economy
While the Namibian government makes it easy to do business, the key attraction which has resulted in increased investment in Namibia, is Namibia’s deposits of green or battery minerals, and as the world transitions to the green economy and demand grows, Namibia can meet these demands. The good state of infrastructure in Namibia, including the upgrades to the ports of Walvis Bay and Luderitz is a critical factor supporting increased investment in Namibia’s mining sector.
The current Mining Laws, including the Minerals Policy of Namibia, Minerals Prospecting and Mining Act, Minerals Development Fund of Namibia Act, Diamond Act, and the Foreign Investment Act, all contribute to a healthy legislative framework that has, most importantly, remained stable, providing investor certainty, supported by consistent interpretation and application.
The Ministry of Mines and Energy in Namibia has, as one of its primary mandates, the objective of creating and attracting private investment into exploration, prospecting, and ultimately, mine development.
The current Mining Laws in Namibia provide the ideal platform for investment, and where policies or components of the Mining Laws impact, negatively, on investment, the Namibian government has been quick to take action, to reduce or remove the challenges, and the Namibian government has introduced requirements, such as the case in relation to prospecting licences held by Namibians, to ensure that Namibians continue to benefit directly creating an ideal balance.
Namibia’s mining sector is stable and mature, thanks to the long legacy of diamond, uranium, gold, and zinc mining in Namibia.
Gold remains a safe haven in the world and despite the Covid-19 pandemic, has remained an important hedge against the vagaries of the pandemic’s impacts.
Most importantly, however, Namibia has extensive deposits of cobalt, lithium and copper. These minerals are vital to the Just Transition through the use of renewable energies, and electric vehicles. These battery minerals are in extremely high demand, particularly for batteries that power electric vehicles. While renewable energies, including hydrogen, will holistically support the transition to the green economy, the immediate focus is on electric vehicles.
Even with the accessibility of good quality synthetic diamonds, the world’s demand for quality diamonds fluctuates, but never disappears. The abundance of good quality large diamonds in Namibia, means that the country will remain an important source of diamonds to meet demand.
Diamond mining will continue to contribute significantly to Namibia’s gross domestic product, transformation, and growth. As the extraction and beneficiation of battery minerals increase however, the income (including foreign investment) will supplement the substantial income from Namibia’s diamond mining sector, for the foreseeable future, and may, in the medium- to long-term, outstrip the financial benefits from diamond mining.
There are a number of expansion projects at brownfield sites, and Greenfield projects that are transitioning to full mining operations or will be doing so in the near future.
These projects are not only focused on battery minerals, but also diamond, uranium and zinc mining and includes operational mines such as Scorpion Zinc and Rosh Pinah.
There are a number of companies in Namibia focusing on battery minerals, including Lepidico, which is developing a lithium mine in Western Namibia, and Desert Lion Energy, also focusing on lithium. Gecko Namibia is developing cobalt in the Kunene Region. Other operations include Weatherly Mining Namibia (copper), and B2Gold (gold).
Warren Beech is CEO at law firm Beech Veltman Incorporated.
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