Govt urged to clarify policy on minerals value addition

Various stakeholders have called for clarity on the policy regarding value addition to critical raw materials, given the recent ban on exporting minerals in their raw form.

This concern was expressed buy a panel of experts on Desert Radio on Thursday.

Economist Salomo Hei said there is a need for policy clarification, considering Namibia’s economic structure has remained unchanged since the 1980s.

“Ideally, we have a very big tertiary sector, and if we are moving towards value addition, which is essentially in the secondary sector, you must be clear about what exactly value addition is.

“We thought the minister of finance was perhaps going to break down the policy position and interventions during the midterm budget review, but he did not,” he said.

Hei said there is a policy vacuum in Namibia, which could potentially discourage investment.

“Investors want to know exactly what they’re signing up for.

If they know that value addition needs to be 30%, investors would then decide whether it’s worth their return,” he said.

Bryan Eiseb, the executive director of mines and energy, said there are ongoing consultations with stakeholders to formulate a policy on the desired level of value addition in Namibia.

“When we started with this initiative, we asked the Cabinet to consider this and make a pronouncement, which they favourably did.

“And in that Cabinet directive, certain minerals were highlighted.

And we as a ministry have started consultations in terms of formulating what this policy should eventually look like,” he said.

Eiseb said the policy initiative aims to avoid a repeat of the situation in the diamond sector.

“Diamonds were discovered a 100 years ago in Namibia, but we have very little to show in terms of the beneficiation of diamonds.

India, a non-diamond-producing country, has factories which add value to our diamonds.

“We cannot have that situation. Let’s have a situation where, a 100 years from now, the lithium industry has evolved from a raw product to a refined product,” he said.

Economist Robert McGregor highlighted the need for a secure investment framework and policy certainty to attract and retain investors.

“It’s important for investors across all industries to know what the rules of the game are before they start,” he said.

McGregor stressed the importance of clear guidelines for mining companies regarding how far down the value chain their responsibilities reach.

“From a mineral perspective, we need to consider to what extent we hold the mine responsible and how far along.”

McGregor said challenges associated with manufacturing, scale, input costs, and profitability should be considered.

“In the Namibian context scale means lot.

We have a relatively small economy and a relatively small population, so manufacturing will generally remain a challenge.

“In addition to that, we have relatively high taxes in this country, compared to other countries.

“And then relatively high input costs like water, especially because we are a water-scarce country, and energy costs as well.

“When we consider all these, we could have a policy that speaks better to investors,” he said.

Lauren Davidson, an economist at the Chamber of Mines of Namibia, said there is a need to nurture exploration in Namibia.

“We need to ensure that governments, through agreements, bring in the necessary research and technology to develop our mineral resources and extract the desired value from them.

“It has been mentioned that Namibia possesses mineral resources, but our grades are low. This implies the cost to extract those resources is high,” she said.

Davidson said there are a lot of mining opportunities in Namibia’s mining sector and there is a need for advanced technologies, research, and development to reduce various costs.

“So, from our perspective, we focus on policies that continue to drive exploration in the industry, because exploration gives rise to potential mines and projects.”

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