By: Nghiinomenwa-vali Erastus
The Namibian constitution states that natural resources below and above the surface of the land and in the continental shelf shall belong to the state if they are not otherwise lawfully owned.
However, this has not been the case as foreign ownership dominates the mining sector, from Canadian, Chinese, and others. Moreover, the country’s biggest private game reserve is offered, if not already sold to Mexico.
The ownership of local minerals and other resources has drawn the wrath of the public and opposition parties as the country’s inequality worsens.
Responding to the public outcry regarding mineral ownership, and access to such riches, Mines and Energy Minister Tom Alweendo has responded, yesterday in parliament.
In his four pages strongly worded response, Alweendo suggested two solutions; the country can reclaim ownership of its mineral resources as suggested by the country’s constitution.
He also confirmed that currently both mining and petroleum sectors are dominated by foreigners – saying that it is because operating in the two sectors is technological and capital-intensive.
He suggested that local ownership should start with government ownership- the state ownership should take form where the state owns several shares/equity in all mining companies and petroleum for which it does not have to pay for such shares.
This is referred to as free carry.
Furthermore, if the state wants more shares/equity in a specific mineral or petroleum company beyond the free carry, it should be allowed but at a cost.
According to Alweendo, all it requires is for the government to come up with the level of free carry/free shares- that investors will also agree to.
He, however, warned his fellow parliamentarians that it will require sober-mindedness.
The second option to ensure the country has some sort of ownership and benefit beyond taxes, and royalty is to incentivise entrepreneurs and investors by establishing a State-Funded Mineral Exploration Fund.
In Alweendo’s explanation, the Fund can be funded partially by mining royalties- and it will be used to assist eligible local entrepreneurs who want to explore and mine.
This is, however, opposed to the current decision by the government to save the mineral royalties for the future generation in the wealth fund despite the current ownership inequality.
“If we agree that local ownership is so important -and we do agree- and we also argue that perhaps awarding exploration rights to those without the ability to carry out exploration is not the right way to incentivise local ownership, how then do we solve this conundrum?” asked Alweendo.
He asked this question just a few days after threatening those with exploration rights, but not acting on them; and also that the ministry will tighten its requirements on issuing the right to those who don’t show ability.
The minister told the parliament that his ministry has empirical evidence that those awarded exploration rights without the requisite capability to do exploration have created a trading market for such rights, selling them to the highest bidder.
However, he said, the money generated does not go to the state but to the few who acquired the rights.
He suggests that if auctioning exploration rights is the ideal way, then it should be done by the state and the parliamentarians should start with the law amendment to provide legal ground.
Alweendo highlighted that this is the best time now to come up with such provisions that will enable auctioning since the Mining Act is currently being amended.
WHY LOCAL OWNERSHIP?
Alweendo told his fellow policymakers that resource ownership needs to be discussed candidly and pragmatically.
This is due to the growing public voices criticising the fact that companies exploiting the country’s mineral and petroleum riches are mainly owned by foreigners.
“I wholeheartedly agree with this view- and I may add that it is untenable and it is indefensible,” said Alweendo.
He told his fellows that they need to figure out how to change the status quo while still ensuring that the two sectors continue to be economically beneficial to Namibians.
Alweendo also reminded the public and policymakers that the status quo exists because the foreign-dominated sectors require complex technology and risk capital.
He added that those who are participating and owning the resources have access to risk capital and is a requisite to have the technology and the required capital to ensure ownership and benefit.
Given the energy transition brought by the global undertakings to address the effect of climate change, there is now a global demand for critical raw materials and metals- some of those minerals such as lithium are in Namibia.
According to Alweendo, this gives a window of opportunity to transform the Namibian economy- to address the triple social ills of inequality, unemployment, and poverty however, he said it depends on how the country deals with such opportunities.
The mining minister has also highlighted that the country can gain more from its resources if it stops exporting critical minerals in their raw form.
Saying the gain from local content is more compared to resources revenue which is currently being derived by the state through taxes and royalties.
Furthermore, the economy should also step up in terms of its ability to offer ancillary services to the multinational companies that doing the extracting in the country.
“In cases where local entrepreneurs are not able to provide certain services we will need a clear program as to how to capacitate local entrepreneurs,” said Alweendo to his fellow policymakers.
He updated that the ministry has a draft of a Local Content Policy and is available for public input, while a workshop will be held in the first half of this year to finalise it. Email: email@example.com