Africa-Press – Namibia. THE Ministry of Mines and Energy is proposing that royalties for all minerals be capped at 10% to allow for flexibility to increase the current low rates, particularly during boom market conditions.
THE Ministry of Mines and Energy is proposing that royalties for all minerals be capped at 10% to allow for flexibility to increase the current low rates, particularly during boom market conditions.
This was said by the mining commissioner and deputy executive director of mines and energy, Erasmus Shivolo, when he made a presentation on the draft minerals bill to an engagement that included members of parliament last month.
He said in the current Minerals (Prospecting and Mining) Act, royalty rates are capped at 5% for dimension stone, 3% for base and rare, precious metals and nuclear fuels minerals, while industrial minerals are at 2%, and precious stones at 10%.
“This leaves little room for adjustment in future when the need to increase arises,” Shivolo said.
He said the Minerals Act, which was promulgated in 1992, needs reviewing to keep up with the dynamics of the industry, and to create and maintain a competitive environment for investment to the benefit of all Namibians.
He said the proposed changes will enable allowable deductions on levies, charges, and fees to be defined.
Currently, mining companies are allowed to deduct levies, charges, and fees, from royalty payments, Shivolo said.
“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,” he said.
On ownership, the bill provides for Namibians to procure and maintain ownership of not less than 5% of equity in mining companies as may be prescribed by the mining charter under the national equitable economic empowerment bill.
“Currently the act does not prescribe any local ownership in either exploration and prospecting licences or mining licences.
“However, there is a growing public view that the country is not benefiting equitably from its mineral resources, because most mining companies are owned by foreign investors without local participation,” Shivolo said.
As a way of creating downstream jobs, Shivolo said each holder of a mining licence will be required to ensure that a percentage of annual production from the mine is made available for processing, smelting, refining or other beneficiation processes in Namibia, provided the relevant facilities are available.
“Such percentage will be agreed on following a process of consultation between the mineral rights holder, and will be reflected in the mineral agreement relating to such mining licence,” he said.
Shivolo said there is a need for sand mining to be covered by mineral rights, as currently there is no clear legal framework to regulate sand mining under any ministry.
He said the Ministry of Environment, Forestry and Tourism requires an environmental clearing certificate when mining sand, and the Ministry of Agriculture, Water and Land Reform regulates sand mining in river beds.
“No permitting system for sand is covered by the act. When licensed or permitted, it will lead to proper environmental management and direct monetary contributions to the fiscus,” he said.
Shivolo said the bill provides for the minister of mines to make regulations necessary or convenient for the proper administration and implementation of the act.
“Currently there is no provision in the act for the minister to make regulations, thus making some provisions of the act difficult to enforce,” he said.
Shivolo said the proposed bill makes provision for the introduction of a small-scale mining permit, which is tailor-made to the needs of small-scale miners in Namibia.
“The permit is designed to be affordable, easily accessible, and protective of the interests of the small-scale miners without stringent requirements,” he said, adding that provisions for mining claims regulations are too stringent for small-scale miners, resulting in non-compliance.
As the lifespan of mines is limited, the bill provides for mine closure plans and financial assurance to be a requirement in the mining licence application process to ensure the cost of rehabilitation is carried by the company and will not pass to the state after mine closure.
“Currently closure and rehabilitation plans are left at the discretion of mining companies with the risk of inadequate plans and sufficient financial resources and residual risk to the government,” he said, adding that regional stakeholder meetings will be conducted to solicit input for incorporation into the minerals bill.
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This was said by the mining commissioner and deputy executive director of mines and energy, Erasmus Shivolo, when he made a presentation on the draft minerals bill to an engagement that included members of parliament last month.
He said in the current Minerals (Prospecting and Mining) Act, royalty rates are capped at 5% for dimension stone, 3% for base and rare, precious metals and nuclear fuels minerals, while industrial minerals are at 2%, and precious stones at 10%.
“This leaves little room for adjustment in future when the need to increase arises,” Shivolo said.
He said the Minerals Act, which was promulgated in 1992, needs reviewing to keep up with the dynamics of the industry, and to create and maintain a competitive environment for investment to the benefit of all Namibians.
He said the proposed changes will enable allowable deductions on levies, charges, and fees to be defined.
Currently, mining companies are allowed to deduct levies, charges, and fees, from royalty payments, Shivolo said.
“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,” he said.
On ownership, the bill provides for Namibians to procure and maintain ownership of not less than 5% of equity in mining companies as may be prescribed by the mining charter under the national equitable economic empowerment bill.
“Currently the act does not prescribe any local ownership in either exploration and prospecting licences or mining licences.
“However, there is a growing public view that the country is not benefiting equitably from its mineral resources, because most mining companies are owned by foreign investors without local participation,” Shivolo said.
As a way of creating downstream jobs, Shivolo said each holder of a mining licence will be required to ensure that a percentage of annual production from the mine is made available for processing, smelting, refining or other beneficiation processes in Namibia, provided the relevant facilities are available.
“Such percentage will be agreed on following a process of consultation between the mineral rights holder, and will be reflected in the mineral agreement relating to such mining licence,” he said.
Shivolo said there is a need for sand mining to be covered by mineral rights, as currently there is no clear legal framework to regulate sand mining under any ministry.
He said the Ministry of Environment, Forestry and Tourism requires an environmental clearing certificate when mining sand, and the Ministry of Agriculture, Water and Land Reform regulates sand mining in river beds.
“No permitting system for sand is covered by the act. When licensed or permitted, it will lead to proper environmental management and direct monetary contributions to the fiscus,” he said.
Shivolo said the bill provides for the minister of mines to make regulations necessary or convenient for the proper administration and implementation of the act.
“Currently there is no provision in the act for the minister to make regulations, thus making some provisions of the act difficult to enforce,” he said.
Shivolo said the proposed bill makes provision for the introduction of a small-scale mining permit, which is tailor-made to the needs of small-scale miners in Namibia.
“The permit is designed to be affordable, easily accessible, and protective of the interests of the small-scale miners without stringent requirements,” he said, adding that provisions for mining claims regulations are too stringent for small-scale miners, resulting in non-compliance.
As the lifespan of mines is limited, the bill provides for mine closure plans and financial assurance to be a requirement in the mining licence application process to ensure the cost of rehabilitation is carried by the company and will not pass to the state after mine closure.
“Currently closure and rehabilitation plans are left at the discretion of mining companies with the risk of inadequate plans and sufficient financial resources and residual risk to the government,” he said, adding that regional stakeholder meetings will be conducted to solicit input for incorporation into the minerals bill.
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