Chamber of Mines to seek clarity on govt's 10% free-carry interest proposal

The Chamber of Mines of Namibia is seeking clarity on a proposed 10% free-carry interest for government under the draft minerals agreement that forms part of the proposed Mineral Resources Development Bill.The draft bill is currently open for public input until August, with further consultations expected before parliament debates the final legislation.The chamber's CEO, Veston Malango, revealed this on Friday when he presented the 2024 annual mining review report in Windhoek."The chamber has undertaken to first obtain clarity on these matters before advancing further discussions on free carry or the draft minerals agreement," Malango noted. Mining companies operating in Namibia pay 37.5% corporate tax, while diamond operations face an elevated 55% rate.Royalties depend on the type of mineral, with 3% for precious and base metals, 2% for industrial minerals and 10% for diamonds and certain gemstones.Government can also impose windfall royalties if prices surge.Other obligations include 15% VAT (with exports zero-rated), a 1% training levy on payroll, and withholding taxes of 10 to 20% on dividends, 10% on interest and 10% on royalties to non-residents.Empowering EpangeloUnder the draft minerals agreement, government will receive a 10% stake in new mining and energy projects at no cost, with the cost borne by the investor, not through cash payments, but by dilution of the developer’s equity.Epangelo Mining will hold government's interest in the mining projects.Currently, Epangelo Mining, through its subsidiary JG Investments, holds a 7.5% interest in QKR Namibia Mineral Holdings (Pty) that operates the Navachab Gold Mine.Epangelo acquired the 7.5% interest via a US$110 million loan in October 2014.Epangelo Mining also has a 10% stake in Swakop Uranium, which was acquired through a US$216 million loan from Taurus Minerals, the majority shareholder in Swakop Uranium. The loan, acquired in 2012, will be paid over 15 years.In addition, Epangelo has a 10% free carry in Trigon Metals, the previous owners of Kombat Copper Mine, and another 10% in Sakawe Mining Corporation.The Namibian government is a 50% shareholder in Namdeb Holdings, together with De Beers.Government holds a 3.52% stake in Rössing Uranium Limited, where China National Uranium Corporation has 68.62%, Iran Foreign Investment Company 15.29% and the Industrial Development Corporation of South Africa 10.22%.The inactive Minerals Development Fund of Namibia, a sovereign wealth fund, holds 6.53% in Ongopolo Mining, a subsidiary of Consolidated Copper Corp (CCC).The Minerals Development Fund was established in 1996 to facilitate the sustainable and responsible use of Namibia's mineral, geological and energy resources.It was designed to provide loans to emerging small-scale miners, but has been defunct since around 2012. The fund is currently under review, and there are plans to resuscitate it.Proposed implementationMalango said the chamber received the draft minerals agreement in September 2024 for comment and input.The proposed implementation of the agreement raises a number of questions and concerns, he said, relating to how it would impact existing shareholding structures at mines where Namibians or BEE entities already have shareholding and how it would fit into the proposed but pending legislative and policy proposals already dealing with ownership, such as the New Equitable Economic Empowerment Framework (NEEEF) and the Mining Charter."The chamber has undertaken to obtain clarity on these matters, which must be addressed before advancing further discussions on free carry or the draft minerals agreement," Malango explained. Design a model In April, former Chamber of Mines president Zebra Kasete, in his annual report, said the chamber's tax committee was developing a tax model to address the proposed 10% government free-carry shareholding in mining companies.Kasete said the tax model facilitates necessary adjustments to the mining taxation framework, accommodating the desired 10% free carry.According to Kasete, the chamber believes the proposed government free-carry shareholding would impose an additional cost burden on mining companies, as they would be required to finance government’s equity.Kasete explained that the chamber consequently classified the proposal as a tax matter.On Friday, Malango said the chamber’s tax committee is working on a tax model to address the desired level of free carry at 10%, which will determine the necessary adjustments in the overall mining taxation framework to accommodate the desired level of free carry.Sweeping powersNamibia’s proposed Mineral Resources Development Bill would give the government greater oversight of ownership changes in companies holding mining licences.The draft law, now circulated for public comment, introduces stricter rules requiring ministerial approval for any change in shareholding or control of unlisted companies involved in mining.This covers not just outright sales but also new share issues, pledging shares as loan security or other transactions that could shift who ultimately controls the licence.Under the proposed changes, even indirect forms of control – such as agreements giving a minority shareholder effective power over board decisions – would be captured under the definition of “controlling interest”.

Chamber of Mines to seek clarity on govt's 10% free-carry interest proposal

Comments

Namibian Sun 2025-10-15

Please login to leave a comment

Chamber of Mines to seek clarity on govt's 10% free-carry interest proposal

Comments

Namibian Sun 2025-10-15

Please login to leave a comment

Login