New rules for prospecting licences

MINING exploration companies applying for new Exclusive Prospecting Licences (EPLs) or renewals will henceforth be required to show proof of local equity participation and efforts to address poverty in areas where they are active, where applicable.

In terms of new directives issued earlier this month by the Ministry of Mines and Energy, meeting these new requirements is conditional to such licences being issued or renewed, although some companies have been given a grace period in which to fulfil these requirements. While the mining industry favoured an approach where local equity participation would be facilitated once a project entered into the actual mining phase, the Ministry was of the view that the entry cost – once exploration has been successfully completed – would be prohibitively high.In an exclusive interview yesterday, Mines and Energy Minister Erkki Nghimtina made it clear that his intention was to empower especially small, rural communities and not to facilitate yet another round of self-enrichment by opportunistic new elites.’Government is coming under a lot of pressure to address poverty in rural communities. For example, if you give a licence to do exploration in the Kavango and you do not include local communities in some way, you are creating a political time-bomb,’ Nghimtina said.Concern was raised about the particular phrasing of the new directives, viz. that ‘certain previously disadvantaged Namibians’ would have to be given opportunity to buy into mining projects. But Nghimtina made it clear that by this he meant the communities where mining exploration was taking place.’We are not saying, ‘you have to give so much or so much.’ What we are saying is that we are talking about addressing poverty in a meaningful way – giving them a new borehole, or helping them with transport, something that helps the affected community directly,’ he said.Exploration companies would also be required to deposit the funds they intend investing in exploration with local financial institutions. This move appeared to be aimed at discouraging so-called ‘land-locking’ by which some larger companies hold large tracts of land under licence, thereby discouraging their smaller competitors from developing potential mining deposits in the same area.In the past, mining companies have come under pressure to accede to demands for local equity participation – or Black Economic Empowerment, to use the somewhat discredited term – but this was the first time that exploration licenses were made conditional to local empowerment.Nghimtina acknowledged that there was rising concern over perception that only certain individuals appeared to benefit from empowerment schemes. By introducing this at the earliest stage of a mining project, his hope was that more people could benefit from such projects by making it more affordable.’We are talking about non-renewable resources, which are held in trust by the government on behalf of the people. We have to empower our people, especially the poorest ones, and we have to do so with the limited means at our disposal,’ he said.* John Grobler is a freelance journalist; johngrob@iway.na