Namibian minerals policy clarified

Thursday, 12 May 2011

A Namibian state firm will have exclusive rights to uranium developments under forthcoming legislation, but a government statement now clarifies the change will not affect current exploration and mining licenses. 

The Rossing mine has supplied about 100,000 tonnes of uranium since 1976

Mines and energy minister Isak Katali made an official statement this week, following a government announcement last month that its state-owned mineral exploration company, Epangelo Mining Ltd, would have exclusive control over new strategic minerals developments. Namibia has two significant uranium mines capable of providing 10% of world output.

 

The government decision is meant to align the mining sector's contribution to government revenue, mostly through royalties, with its share of gross domestic product. According to Katali, the country had become "an Eldorado of speculators and other quick-fix would be mineral explorers and mining developers.

Katali's statement emphatically reiterates that the proposed policy does not amount to nationalisation. The proposed changes will effectively only apply to new licence applications. Existing exploration and mining licences will not be affected, although joint development arrangements may be considered in the case of licences for which no development has taken place for a "very long time."

Applications which are already in the pipeline will be considered under the existing procedures on their individual merits, each one "on its strength without prejudice". However, Katali acknowledged that licence conditions might require the licence holder to give a first right of refusal of shareholding to the state entity before approaching other parties. Mining licence applications arising from existing prospecting licences would be treated in a similar way to already-lodged applications.

Future expansions of mining operations by conversion of adjacent existing prospecting licences into mining licences will be categorised in a similar way to existing operations, although in cases where the licence holder cannot demonstrate capacity to develop the expansion, joint development of the resource by the licence holder and the Namibian government could be an option.

In effect, the only likely impacts on existing licensees will concern future expansions of existing prospecting licences, which will be treated as new applications.

The cabinet decision will be implemented through a change in legislation, which is currently being drafted.

Commercial uranium mining has taken place in Namibia since 1976, when the Rössing mine started up. Rössing Uranium is 68.6% owned by Rio Tinto, with most of the remainder owned by South African and Iranian interests and 3% by the Namibian government. Paladin's Langer Heinrich mine started up in 2006, while production at Areva's Trekkopje is ramping up. Meanwhile, Extract Resources is planning to start production at Husab in 2014. Other uranium deposits including Valencia, Etango, Marenica, Omahola and Tubas-Tumas are in various stages of development or feasibility studies, all led by overseas entities.

Details welcomed

Overseas companies involved in developing Namibia's uranium deposits were quick to welcome Katali's statement. Paladin managing director and CEO John Borshoff said the removal of any doubt over sovereign risk was very welcome and would pave the way for significant ongoing investment by the company. Len Jubber, CEO of Bannerman Resources and 80%-owner of the undeveloped Etango project, also welcomed the Namibian government's objective of investing in new mineral project developments. Extract Resources also greeted the confirmation warmly, confirming that the proposed policy changes would not adversely affect Swakop Uranium's existing prospecting licence or its application for a mining licence for the Husab project.

 

Researched and written

by World Nuclear News