Auctioning of mining licences opposed

There is currently a moratorium on mining rights applications, which was instituted last November and remains in place until 17 August 2021.

01 April 2021 | Local News

OGONE TLHAGE







WINDHOEK

The Namibia chamber of mines is opposed to plans by the ministry of mines to auction exclusive prospecting licences (EPLs) due to the difficulty of determining accurate prices.

There is currently a moratorium on mining rights applications, which was instituted last November and remains in place until 17 August 2021.

Government was advised to auction off fishing rights and mining licences by the High-Level Panel on the Namibian Economy, led by Bank of Namibia governor Johannes !Gawaxab.

The concept of auctioning is premised on an asset having a known value, or ‘floor price’, as a starting point to realise better returns.

“In Namibia, the vast majority of EPLs do not have a known value, and would thus equal to zero, and hence cannot be auctioned,” chamber of mines CEO Veston Malango wrote in a letter to mines minister, Tom Alweendo.

Speculation

The Chamber also argued there will be no incentive for exploration by mining companies.

“The auction process itself will be a strong disincentive for serious exploration companies to get involved. The type of exploration companies we want in Namibia - both local and foreign - are those who will be diligent in evaluating the land they propose to apply for,” Malango said.

Auctions will discourage exploration and mining companies from becoming involved because of fears of speculation in the market, he added.

“Serious exploration and mining companies may not want to be associated with the auction process out of a concern that speculators bid on the EPL because of an assumption that if XYZ Pty Ltd is involved, then the land must surely be valuable.”

On enquiry, Alweendo said his ministry will listen to input.

“I’ll consider all input on the issue and how to proceed will be informed by how best to develop and expand the mining sector to the benefit of the country and investors,” he said yesterday.

Listen to us

The chamber suggested licence fees be increased annually as an alternative.

“It is recommended that the ministry should instead increase the annual license fees to align to Southern African Development Community (SADC) standards, at least, or more closely to international standards,” Malango suggested.

According to Malango, the chamber has advocated for an increase in annual licence fees since 2010 as a practical mechanism to optimise government’s share in resource rents and to discourage land-locking and unproductive speculation.

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