Namibia is moving to cap mineral royalties at 10% to allow the country to benefit from its natural resources.
This move is contained in the Draft Bill on the Minerals Act, which seeks to review the law that was passed in 1992.
“Currently in the Minerals Act, the royalty rates are capped at 5% for dimension stone, 3% for base and rare; precious metals and nuclear fuels minerals, industrial minerals are at 2%, while precious stones are at 10%. This leaves little room for adjustment in future when the need to increase arises. Therefore, all minerals are to be capped at 10%, to allow for flexibility to increase the rates from the current low rates, particularly during boom market conditions,” said Mines and Energy Director Erasmus Shivolo.
Now, he said, the mining companies are allowed to deduct levies, charges, and fees, from royalty payments. At times, companies inflate these allowable deductions which results in less payment on royalties to the State. This is because there is currently no definition of what qualifies as levies, charges, and fees in the Act. In the proposed amendments, levies, charges, and fees are now defined.
The Bill further seeks to amend the beneficiation drive for locals, increase local ownership and participation, and the establishment of a mining advisory committee to guide the minister.
Shivolo noted that the Act does not prescribe any local ownership in either exploration and prospecting licences or mining licences, resulting in locals losing out to foreigners.
“In addition, the law has no provision to support or give impetus to the country’s aspiration of local beneficiation. The bill is, therefore, providing for Namibians to procure and maintain ownership of not less than 5% of its equity shares in mining companies as may be prescribed by the Mining Charter under National Equitable Economic Empowerment Framework (NEEEF).
“Each holder of a mining licence shall be required to ensure that a percentage of annual production from the mine covered by such mining licence shall be made available for processing, smelting/refining or other beneficiation process in Namibia, provided that the relevant facilities are available. Such percentage shall be agreed following a process of consultation between the mineral rights holder and shall be reflected in the mineral agreement relating to such mining licence,” he said.
