Namibia mining sectoris investor friendly

The Namibian mining sector hasbecome more investor friendly than South Africa, as the country hasclear policies that have been consistently applied, explains Sandton-based lawfirm Webber Wentzel partner Jonathan Veeran.

Namibia has four policies governingmining and mineral prospecting: the Minerals Policy of Namibia, the Minerals Prospecting and Mining Act of 1992, the Minerals Development Fund of Namibia Act of 1996 and the Diamond Act of 1999.

He highlights that there are clear signs that the country is making an effort to attract Chinese, Indian and Japanese investors, among others. High-level delegations from these countries regularly visit Namibia, with specific areas of potential investment being promoted through targeted conferences, as opposedto the hosting of general conferences thattry to boost investment in an industry asa whole.

“There are already high-level investors in the country, with Namibia producing around 2% of the diamonds in the world from Namibia’s resources. Further, theState-owned mining company Epangelo Mining has shares in various mining projects, with more investments being madein Namibia’s uranium mining industry,” Veeran says.

Namibia also has a large oil and gasindustry, and the clear and concise mining policies make investors’ decisions easierwith regard to large investments in thesector.

Veeran highlights that South Africa should look to Namibia when making larger policydecisions, such as the third iteration of the Mining Charter and the Mineral and Petroleum Resources Development Amendment (MPRDA) Bill. The current versions of the industry-disputed Mining Charter III and the MPRDA are structured for a particular political elite’s benefit,he stresses, and not for broad economic change.

“We often set broad-based black economic- empowerment (BBBEE) targets without understanding the economics behind the situation. I do think that transformationis needed; however, we need to avoid amining lockout,” Veeran says.

When mines are forced to consistently comply with changing BBBEE requirements, companies ask for these equity investorsto be locked in, which limits black shareholders from selling their shares in a mine for a predetermined period. He statesthat this prevents black owners fromselling their shares for profit, which limits their investment portfolios.

Veeran highlights that a better way to ensure black economic empowerment isto create more jobs through enticingforeign investment. There has been rapid growth in the black middle class of Namibia through job creation, associated with athriving mining industry, which requires infrastructure, energy and transport support industries.

“Not everyone is going to be a miningmanager, but we need to create more jobs and I think Namibia has realised this through the way in which it has structured the Minerals Policy. However, Namibia hasa much smaller population than South Africa,” he says.

Lessons to Learn
Veeran explains that South Africa’s policy- makers need to learn from Namibia’sconcise mining charter, with regulations and legislation that aim to create the same environment.

“There must be clear rules that are not open-ended. Very little should be open to interpretation.“Further, the people who administerthese pieces of legislation must be well trained and consistent so that there aren’t wildly different outcomes when applying these laws,” he says.

There also needs to be proper stakeholder engagement where communities, labourand business sit down and communicate more openly. Although, Veeran pointsout, the stakeholders in mining companies need to realise that whatever policy South Africa creates is not going to please everybody.

One upside of policy uncertainty in South Africa is that it has a positive influence on other Southern African Development Community (SADC) countries, owingto the number of South African engineers available.

“When sub-Sahara African countrieslike Namibia need to start developingnew mining ventures, they can and dolook to South Africa for engineeringexpertise on infrastructure and energyprojects. We need to promote the growth of other SADC countries as well,” Veeran concludes, adding that if South Africa’s fortunes were to turn for the better, however, the growing number of companiesthat have a growing interest in resourcebeneficiation on the continent would be equipped to respond.