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Namibian mining’s pulling together boosting country’s economy – Nedbank

Nedbank Capital mining and metals investment banking head Paul Miller speaks to Mining Weekly Online’s Martin Creamer about mining in Namibia. Photographs: Duane Daws. Video: Nicholas Boyd. Video Editing: Lionel da Silva

27th May 2015

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – Despite the Namibian economy being tied to the South African economy, it has been able to grow ahead of South Africa, which a leading mining investment banker puts down to Namibia’s “sensible” mineral policies, as well as the Namibian mining industry’s close working relationship with its government.

Namibia’s economic growth rate is tipped to come in at 4% this year, compared with South Africa’s first-quarter economic growth rate coming in this week at a low 1.3%.

Nedbank Capital mining and metals investment banking head Paul Miller, who recently attended a mining expo organised by the Chamber of Mines of Namibia, was struck by the manner in which the country pulls in the same direction.
 
“It’s had a dramatic effect on the Namibian economy,” he tells Creamer Media’s Mining Weekly Online in the attached video interview.

The main mining projects on the go in Namibia currently are the $2-billion Husab uranium mine project and the Otjikoto gold mine being built by the Canada-listed B2Gold for between $300-million and $400-million, which Miller reports have brought significant benefit to the regions in which they have been built.

He is also impressed by every single mining and exploration company in Namibia being a member of the chamber, which enables the industry to talk with one voice.

Another plus point in Miller’s book is that the relatively modern Namibian mining industry is legacy free.

While many of the goods and services for the Chinese-financed Husab were provided out of South Africa, it has an explicit strategy to procure only in Namibia and China once it is built.

B2Gold, which is an experienced multi-country gold-mine developer, saw to the building of Otjikoto itself and procured leach tanks from Russian boilermakers, who made use of an innovative technology unknown in South Africa.

Although South Africa is a competitive procurement destination, it does not always make the headway it should in the region and Miller sees it as crucial that project developers consider procurement at the time of putting together their project funding plans.

“In that way we can demonstrate how South Africa has a good package around cost-effective capital goods and services combined with export credit finance,” adds Miller.

From a banking point of view, he points out that the downturn in the commodity cycle has not necessarily meant a downturn in business for banks.

On the contrary, bank clients are needing to make greater use of their lines of funding and are continuing to spend stay-in-business capital.

“We’re actually there for that,” says Miller, who reminds that South Africa remains, by a long shot, Africa’s largest mining base supported by a large, globally competitive supply base.

“So it’s not all gloom and doom but we do need to get some of the basics right at a political level,” he adds.

The Chamber of Mines of South Africa last week revealed a strategic plan to get South Africa’s “great mining industry” back on the front foot, when chamber president Mike Teke told the chamber’s well-attended 125th annual general meeting that the organisation aimed to double real investment in mining by 2030 through helping with the creation of a stable, competitive and predictable policy, legislative and operating environment.

He urged Parliament to deal with the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill on an expeditious basis and to ensure that the outcome supported a vibrant and competitive mining sector.

Trying to force mining companies to sell minerals in the domestic market at developmental prices would damage the already strained mining sector, and probably do little to help the downstream sectors.

“We need to deal with and get certainty on the Mining Charter so that we can continue with the transformation programme,” said Teke, who added that the agreed pursuit of a declaratory order of court on the once empowered, always empowered issue remained key to creating certainty in the interpretation of the ownership element of the charter.

Newly appointed chamber CE Roger Baxter said that South Africa was the most industrialised country in Africa through mining, and urged the country to focus on building the future together.

Department of Mineral Resources deputy director-general Joel Raphela, deputising for Minerals Minister Ngoako Ramatlhodi, said he was mindful of the need for the mining industry to move forward to a brighter future, learning from the success collaboration had achieved in health and safety, which had seen fatalities fall 86% from 615 in 1993 to 84 in 2014, mining's safest year on record.

Raphela added that the government was well aware of the need for regulatory certainty in an industry that required long-term investment, which was why the finalisation of the MPRDA Amendment Bill remained a government priority.

On Mining Charter compliance, Teke said that the chamber was confidently able to reiterate that the average black economic-empowerment (BEE) ownership of its members of 38% was 12% higher than the mandatory requirement and that more than R159-billion in net value had been transferred to BEE beneficiaries in the past 12 years.

“What we are seeking is a fair reflection of the progress made,” said Teke, who added that mining was currently taking place under the strain of depressed commodity prices, rapidly escalating costs, electricity supply problems and continued uncertainty regarding some parts of South Africa’s mining and transformation laws.

The 45-year-old Chamber of Mines of Namibia has among its members the producers of gem quality rough diamonds, uranium oxide, special high-grade zinc and acid-grade fluorspar, as well as a producer of gold bullion, blister copper, lead concentrate, salt and dimension stone.

De Beers has a 50:50 joint venture with the government of Namibia, with increasing volume of diamonds recovered from under the sea by Debmarine Namibia.

But when it comes to mining phosphates on the seabed, far more resistance is being offered, along with government dissension.

Namibia’s Fisheries Minister has reportedly warned the government against “blindly” giving approval to companies like Namibian Marine Phosphate, which want to mine marine phosphate.

The Namibian reports that the Minister's comments come after Namibian Minister of Mines Obeth Kandjoze urged government to allow those with licences to start marine phosphate mining activities.

Namibia Statistics Agency reports that the mining sector contributed 9.3% to the country’s gross domestic product in 2013, down from 10.8% in 2012.

Edited by Creamer Media Reporter

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