The Namibian Ministry of Mines and Energy (MME) will not consider or process new applications for mineral rights from November 18, 2020, to August 17, 2021, the ministry said in a statement last year.
The reason is to enable the ministry to review requirements and procedures for right applications. The announcement aligns with the ongoing review of the Minerals Act.
The suspension affects applications that have been made, but not yet finalised, and new applications, explains law firm Beech Veltman CEO Warren Beech.
“While the suspension is for a limited period only, this will, unfortunately, probably impact on mining sector development, but these impacts are likely to be short term, provided that the suspension is limited to nine months, as stated, and that the MME allocates appropriate resources to ensure that, once the suspension is lifted, applications are processed quickly and efficiently.”
However, Beech points out that even a nine-month suspension could have material impacts on applicants that have expended resources on preparing their submissions, and on funding, which is often linked to accurately estimated timeframes that are based on the periods normally associated with application approvals.
“I do not believe that the suspension will have a long-term effect on the Namibian industry and, as such, should be viewed positively. The suspension forms part of the Namibian government’s engagement with key stakeholders on proposed amendments to the Minerals Act.”
Further, Namibia has had a long and successful mining industry, with the sector playing a crucial role in the economy historically, having contributed to about 25% of Namibia’s gross domestic product, notes Beech.
The renewed global focus on copper, gold and battery minerals, which include lithium and cobalt, together with the continued mining of uranium and diamonds, and the continued exploration for oil, ensures that the Namibian sector is in a very good position for 2021 and beyond, he says.
Its mineral resources, combined with its strong policy framework, are likely to ensure that Namibia continues to be a strong investment destination, Beech states.
“Government has ensured that its mining industry, in particular, is investor friendly and, once an investment has been made, that there is relative policy stability and consistency.”
Mining Jurisdictions and Policies
Beech explains that, unlike other African jurisdictions, the Namibian Minerals Policy, adopted in 2002, is clear on its vision for the responsible and sustainable development of the mining industry.
The policy is also clear on the role that the mining industry is expected to play in relation to Namibia’s growth, transformation, development and socioeconomic development.
“There are several features of the mining laws that contribute to stability and certainty, including accessibility to geoscientific data, clear indigenisation requirements, and predetermined tax and royalty rates.”
He points out that, although Namibia has, historically, “flown beneath the radar”, it is certainly a mining jurisdiction that makes investment sense within the context of policy and regulatory certainty, strong infrastructure, and little to no risk in relation to factors that plague other African countries such as political instability, crime and security.
Another differentiating feature of its mining laws and mineral policies is the way in which the Minerals Policy and the Minerals Act address artisanal and small-scale mining (ASM), says Beech.
ASM plays a vital role in most mining jurisdictions often benefiting communities and, ultimately, contributing to an economy.
Workers in the ASM sector are generally unregulated and can often contribute to undesirable consequences such as environmental damage, and loss of State revenue.
“By regulating in Namibia government has acknowledged the importance of ASM, and provided regulation that is appropriate to the size and scale of the mining operations.”
However, there are other factors that must be considered, comments Beech.
With the emphasis on indigenisation and local content, it is not always easy to secure the relevant permissions for noncitizens to work in Namibia and there can be delays, which some stakeholders find frustrating, particularly if these hinder prospecting and exploration processes, which are cost intensive, or the development of mines.
Dealing With Covid-19
The Namibian mining industry was closed briefly, with mining operations resuming within the framework of Covid-19 measures decreed by the government and the MME, comments Beech Veltman associate designate Bryan White.
“The measures have been pragmatic and certainly seemed to be managed well by the industry.”
He adds that the industry will grapple with the Covid-19 measures for some time, and notes that they have largely been normalised as part of mines’ work processes.
Challenges, such as late-notice absenteeism because of Covid-19, the reallocation of supervisors and changes to planned/normal work cycles, have seemingly been managed well, says White.
Beech concludes that, while Namibia’s economy is suffering the effects of Covid-19, mining will play an important role in supporting positive growth and development.