Thursday, February 22, 2024
CommentaryExploring Namibia's mining industry: Lessons for Ethiopia

Exploring Namibia’s mining industry: Lessons for Ethiopia

I recently had the privilege of visiting Namibia’s thriving mining industry, organized by Tulu Kapi Gold Mines S.C., a private mining company operating in Ethiopia. The purpose of this enlightening tour was to foster knowledge-sharing and identify potential strategies that could benefit Ethiopia’s own mining sector. Accompanying me were executives from various mining companies investing in Ethiopia.

Our journey encompassed engaging discussions with key stakeholders, including Epangelo Mining Company, a government-owned mining enterprise, the Chamber of Mines of Namibia, Swakop Uranium-Husab Mine, and a mesmerizing bird’s eye view visit to the salt mine operated by Walvis Bay Salt & Chemicals.

These conversations featured prominent industry leaders, including executive officers and mine managers.

According to the Chamber of Mines’ 2022 report, Namibia’s mining sector experienced an impressive growth rate of 21.6 percent, surpassing the 11 percent growth recorded in 2021. The sector’s contribution to Namibia’s GDP in 2022 reached 12.2 percent.

The operating mines collectively generated a turnover of N$37.961 billion, equivalent to approximately USD 2.1 billion or around 116 billion birr.

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During our visit, we discovered that Namibia is home to 26 operational industrial-scale mines. These mines primarily focus on extracting diamond, uranium, gold, graphite, manganese, lead, zinc, tin, iron ore, salt, and materials used in the cement industry.

To provide insight into Namibia’s mineral production in 2022, for instance, AfriTin Mining (Namibia) – Andrada Mining PLC mined 855 tons of tin concentrate, while B2Gold Namibia PLC extracted 4,581 kg of gold bullion. De Beers Marine Namibia PLC unearthed a remarkable 1.7 million carats of diamonds, and Namdeb Diamond Corporation PLC successfully extracted more than 412,000 carats of diamonds. Navachab mine yielded more than 2,400 kg of gold bullion, and Rosh Pinah Zinc Corporation mined over 79,000 tons of zinc concentrate and 26,000 tons of lead concentrate.

Rossing Uranium Limited, a mine with a 45-year history, extracted more than 2,600 tons of uranium oxide, and Sakawe Mining Corporation extracted more than 51,000 carats of diamonds.

Swakop Uranium’s Husab Uranium Mine, which began production in 2016, proved to be an impressive site during the visit. Its officials informed us that the mine extracted close to 4,000 tons of uranium oxide in 2022. The mine has ambitious plans to ramp up production to 6,000 tons in the near future.

Notably, Husab Uranium Mine is the second-largest uranium mine globally, with a total investment of over USD two billion. It is predominantly owned by a Chinese company, with a ten percent share held by Epangelo Mining Company, representing the Government of Namibia. Epangelo’s share was acquired through a cash payment.

In 2022, the Walvis Bay Salt & Chemicals PLC, which operates on an extensive 6,000-hectare land area with salt-producing ponds, harvested 918,000 tons of raw salt.

In addition to the operational mines, Namibia has attracted significant interest from various companies engaged in mineral exploration. These exploration efforts are targeting minerals such as uranium, cobalt, copper, lead, zinc, vanadium, lithium, graphite, and rare earth minerals. The interested companies hail from China, South Africa, Canada, Japan, Australia, Germany, and local investors, some of whom have joint ventures with Epangelo Mining.

Many of these exploration activities are at an advanced stage, with some having completed definitive feasibility studies and others actively involved in prefeasibility and advanced drilling work.

In 2022, the exploration companies collectively spent approximately 1.3 billion Namibian dollars (equivalent to about USD 72.2 million) on their exploration activities. The Chamber of Mines’ report indicates that several of these projects are likely to transition into operating mines, contributing further to Namibia’s mining industry.

Namibia has a commendable history as a mining country, particularly in diamond mining. Since gaining independence and enacting the Minerals (Prospecting and Mining) Act of 1992, the country has successfully established at least seven industrial-scale producing mines. Based on my observations and the Chamber of Mines’ report, it is highly likely that these numbers will double in the near future.

Veston Malongo, the CEO of the Chamber of Mines, takes great pride in the achievements of Namibia’s mining industry in recent years and holds a positive outlook for its future.

He emphasized the significance of positive engagement between the Chamber of Mines and the Ministry of Mines and Energy, which represents the industry’s interests. Furthermore, he believes that certain conditions are vital for the continued growth of the mining sector in Namibia.

These include a stable and promising mineral prospect, a mining law regime that provides stability and encourages investments, security of tenure for licenses with the right to renew and upgrade, adherence to the rule of law, predictability and transparency in government decisions and actions, fair and transparent decision-making processes, reasonable incentive packages, and competitive and reasonable tax regimes. These factors collectively contribute to a flourishing mining sector in Namibia.

The Chamber of Mines in Namibia is an association representing the mining industry and working towards promoting transparency, responsible practices, and ethical standards within the sector. It consists of various classes of members, including associate members who provide support services to mining and exploration activities, as well as research institutions.

As of December 31, 2022, the Chamber had 30 council members, including a president, vice presidents, and an executive office led by a chief executive officer. The Chamber operates several committees focused on areas such as exploration, human resources, safety, mine surveying, mine consultative forums, power, and environmental and social matters.

In contrast, Ethiopia has undergone significant revisions to its Mining Law over the years.

After repealing the Mining Proclamation of 1971, the country implemented a major overhaul of its Mining Law in 1993. Subsequently, the law was revised again in 2010, amended in 2013 and 2020, and is currently undergoing a third comprehensive revision.

Ethiopia’s geology shows promising potential for various minerals, including gold, iron, phosphate, platinum, nickel, copper, manganese, lead, zinc, tantalum, lithium, potash, as well as industrial minerals like marble, granite, and construction materials, along with precious and semi-precious stones.

However, despite this potential, Ethiopia has not established a single industrial-scale mining operation in the past 30 years, except for the Lege Dembi Gold Mine, which was commissioned prior to the overhaul of the mining law. It is noteworthy that the revision of Ethiopia’s mining law was sponsored by the UNDP and was considered an advanced mining law globally.

During our discussions with officials in Namibia, many mentioned that they received training through a UNDP-sponsored project in the 1990s, focusing on the mining sector. The Namibian Mining Act of 1992 shares similarities with the Ethiopian Mining Law, and considering the manpower training program, it is plausible to assume that the preparation and drafting of the Namibian law also received support from the UNDP following the country’s independence.

Within the past 30 years, Namibia has successfully established at least seven new industrial-scale operating mines, collectively contributing approximately N$24.1 billion (equivalent to around USD1.3 billion) to the country’s economy. The country also boasts a vibrant mineral exploration sector. The number of industrial-scale operating mines is expected to double within the next few years, potentially within a timeframe of five to seven years.

The sector currently contributes 12.2 percent to Namibia’s GDP, with a turnover exceeding USD two billion in 2022.

This stark contrast raises the question of why Ethiopia has been unable to establish a single industrial-scale mine, except for dimension stone mining. It is a matter that requires deep consideration and prompt action from the government and political leaders to find effective solutions.

As Ethiopia endeavors to develop its own mining industry, the invaluable lessons and experiences gained from this insightful tour will undoubtedly serve as a catalyst for progress, paving the way for a prosperous future.

 (Wondemagegnehu G.Selassie is a natural resources lawyer)

Contributed by Wondemagegnehu G.Selassie

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Video from Enat Bank Youtube Channel.

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