MPs slam N$8bn royalties in five years
Lawmakers want new mining regime
It has also been recommended that the Namibian government amend its laws to make it mandatory for the state to own shares in every mine - at no cost.
Members of parliament say the N$8 billion in royalties government has received from mining activities over the past five years is ‘very low’, urging for a radical shift in how Namibia benefits from her resources.
To remedy the situation, the parliamentary standing committees on natural resources and economics and public administration - in a joint report – have called for increased government ownership in mines, as well as for the monitoring of private mining strips for the potential smuggle of diamonds and other materials.
It was also recommended that the Namibian government amend its laws to make it mandatory for the state to own shares in every mine at no cost.
“The ministry of mines should ensure that no mining rights are given without 50% shareholding of the state, and should encourage [or] compel mining companies to establish processing plants for value chain addition and assist financially in setting up refining and value-addition factories,” the report read.
Government has previously cautioned against this stance, saying it could put off investors.
Revenue vs royalties
After the joint investigation, the committees raised alarm on both the effectiveness and shortage of mining inspectors to investigate working conditions and inner workings of mines in the country.
They also pointed out that there is urgent need for value addition before resources are exported.
“Only about N$8 billion was collected from royalties in five years. This is very small compared to the revenue from mines in the same period,” the report said, without indicating how much revenue was made during that period.
Figures from 2021 show that mines paid N$1.55 billion in corporate taxes, N$1.6 billion in royalties and N$231 million in export levies. Nearly N$6 billion was spent on salaries and wages, and N$17 billion was spent on local procurement.
The following year, in 2022, the Chamber of Mines of Namibia reported that the mining industry incurred an overall loss of N$391 million, but still paid royalties of more than N$2 billion.
There are also concerns about mining companies with private airstrips, with the committees urging that they need to be regulated. The report added that there is a need for monitoring to ensure that diamonds and other minerals are not transported from private airstrips, unknown to customs officers.
“The mines ministry, in collaboration with entities responsible for the airspace, should investigate and monitor the movement of aircraft at private airstrips of mines. The customs and excise department of the Namibia Revenue Agency (NamRA) should be empowered to monitor all points of entry for mining inputs as well as points of exit for mineral exports,” the report read.
Remains a headache
The report was co-signed by Tjekero Tweya, chairperson of the natural resources standing committee, as well as Natangue Ithete, who chairs the economics and public administration committee. It also pointed out that the valuation of commodities remains a headache, with the mines ministry’s laboratory not up to international standard and therefore not accredited. The ministry’s plan to set up an accredited lab was hampered by a lack of funds, the committees found.
The report also shed light on Namib Desert Diamonds (Namdia), which is believed to be outsourcing its responsibility to third parties, therefore defeating the purpose of its very existence. The committees urged Namdia and the Namibia Diamond Trading (NDTC) to collaborate to set up the laboratory for the mines ministry. It also recommended that NamRA and the finance ministry audit mining companies that evade corporate tax to determine whether they are making a profit or a loss.
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To remedy the situation, the parliamentary standing committees on natural resources and economics and public administration - in a joint report – have called for increased government ownership in mines, as well as for the monitoring of private mining strips for the potential smuggle of diamonds and other materials.
It was also recommended that the Namibian government amend its laws to make it mandatory for the state to own shares in every mine at no cost.
“The ministry of mines should ensure that no mining rights are given without 50% shareholding of the state, and should encourage [or] compel mining companies to establish processing plants for value chain addition and assist financially in setting up refining and value-addition factories,” the report read.
Government has previously cautioned against this stance, saying it could put off investors.
Revenue vs royalties
After the joint investigation, the committees raised alarm on both the effectiveness and shortage of mining inspectors to investigate working conditions and inner workings of mines in the country.
They also pointed out that there is urgent need for value addition before resources are exported.
“Only about N$8 billion was collected from royalties in five years. This is very small compared to the revenue from mines in the same period,” the report said, without indicating how much revenue was made during that period.
Figures from 2021 show that mines paid N$1.55 billion in corporate taxes, N$1.6 billion in royalties and N$231 million in export levies. Nearly N$6 billion was spent on salaries and wages, and N$17 billion was spent on local procurement.
The following year, in 2022, the Chamber of Mines of Namibia reported that the mining industry incurred an overall loss of N$391 million, but still paid royalties of more than N$2 billion.
There are also concerns about mining companies with private airstrips, with the committees urging that they need to be regulated. The report added that there is a need for monitoring to ensure that diamonds and other minerals are not transported from private airstrips, unknown to customs officers.
“The mines ministry, in collaboration with entities responsible for the airspace, should investigate and monitor the movement of aircraft at private airstrips of mines. The customs and excise department of the Namibia Revenue Agency (NamRA) should be empowered to monitor all points of entry for mining inputs as well as points of exit for mineral exports,” the report read.
Remains a headache
The report was co-signed by Tjekero Tweya, chairperson of the natural resources standing committee, as well as Natangue Ithete, who chairs the economics and public administration committee. It also pointed out that the valuation of commodities remains a headache, with the mines ministry’s laboratory not up to international standard and therefore not accredited. The ministry’s plan to set up an accredited lab was hampered by a lack of funds, the committees found.
The report also shed light on Namib Desert Diamonds (Namdia), which is believed to be outsourcing its responsibility to third parties, therefore defeating the purpose of its very existence. The committees urged Namdia and the Namibia Diamond Trading (NDTC) to collaborate to set up the laboratory for the mines ministry. It also recommended that NamRA and the finance ministry audit mining companies that evade corporate tax to determine whether they are making a profit or a loss.
[email protected]
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