Alweendo supports Namdeb's tax break

12 December 2019 | Business

Mines minister Tom Alweendo says he supports a proposed tax break for Namdeb, as anything that would help save the company from closure after 2023 is welcomed.

Namdeb has asked for a tax break to help it invest in its accretion process, which involves reclaiming land from the sea for mining. The company stopped the process in 2017. Namdeb pays a 10% royalty on turnover and a 55% corporate tax on profits. The diamond industry's mining royalties to the government stood at N$1.15 billion during the 2017/18 fiscal year. Namibian Sun asked Alweendo what his position was on the tax break proposed by the company in which the government holds a 50% stake. “We had a discussion with the ministry of finance, there is that understanding that it sounds like a good idea because what we want is prolonged employment for people and if we can do that why not?” said Alweendo in response.

“Namdeb is really a land-based diamond production company. The value of the resource is really not what it used to be. I am surprised that we still have got some diamonds left but as time goes on they need to make more space available for mining operations and that means reclaiming land from the sea.

“The idea is that, if we do not do that, we may find ourselves in a situation where the mine will [only] go on for the next two or three years. Therefore management and the board were of the view that maybe ... we can still get more mining areas by reclaiming land from the sea,” he said. “For that you need further investment to make that happen and then the request was made to say, can we maybe in the meantime suspend paying royalties to government and therefore create an environment where can have more cash to be able to make this happen.

“If that happens, government will be in a better position to receive royalties for a much longer time period than if we do not do that...”

Alweendo could not say when a decision can be expected. “The treasury needs to verify some of the figures that are being proposed, the figures that we need to agree to. That is ongoing,” he said.

The ministry of finance was asked about the tax waiver three weeks ago and is still to respond.

Namdeb CEO Riaan Burger said a tax break would help the company to extend the life of its mining operations.

“The Namibian business environment, [and] the policies that are in place, are conducive for business but at the same time the specific royalties and tax regime that are applicable to diamonds are fairly high. While that may be conducive or viable for new diamond operators, it might not be conducive to an ageing marginal asset like Namdeb,” Burger explained.



OGONE TLHAGE

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