As Namibia’s leading economic sector, the mining industry has benefited from a competitive investment climate, which includes a recently amended VAT Act and the ability for operators to recoup their expenditures. The Chamber of Mines of Namibia is responsible for the stewardship of mining and exploration activities with a view to generating in-country value, of which it states approximately 85% is retained in the local economy. Energy Capital & Power spoke with CEO Veston Malango about the competitiveness of the sector and efforts to generate and retain local value.

What have been the Chamber of Mine’s key achievements in 2023?

We have had quite a number of successes, the most recent being that the government accepted our proposals to amend the VAT Act of 2000. That is how the VAT amendment was gazetted in December 2022 and became effective on January 1, 2023. This is important because for the first time, exploration companies can register for VAT unhindered. Secondly, they are able to claim input VAT claims from the receiver of revenue. Before, the Minister of Finance was implementing that law on a discretionary basis. This is the biggest achievement for us because we have made the investment climate attractive for exploration companies to come to Namibia.

Why is Namibia’s mining industry an attractive destination for investment?

When you get a mining license or an exploration permit, that is a property right that is respected up to the constitution. It cannot just be grabbed away by anybody. Exploration is a very high risk, and the statistics are that out every 1,000 exploration projects, only one might become a mine. In our legislation, should your exploration become a mine, then all the expenditures over the years – it can be 10 years or more that you spent on exploration – can be recouped against your taxes in the first year of the mine being in production. This is something that you don’t find anywhere else in the world – it’s unique to Namibia.

What is Namibia’s general approach to engaging with foreign investors in the mining sector?

It’s very open. Namibia welcomes investors from all over the world. There are no specific requirements that Namibia is looking for. For example, we are not looking for investors from a specific part of the world, but rather from all over, which is why you find players from everywhere in Namibia.

What is being done to ensure that Namibia’s mining industry both generates and retains local value?

Over the years, the government has benefited from mining activities – primarily through direct taxes. The big one is the royalties export levy and corporate tax. Beyond that, the government receives two streams of revenue for every job that we create. Number one: a Pay As You Earn tax that goes to the government. The second is VAT. That is where we make the biggest impact. [In 2022], we as an industry generated about $38.9 billion. Out of that, we spent $16 billion on the purchase of goods and services locally in Namibia, which comes to about 44% of what we generated. The second value is that 97% of the people we employ are Namibian citizens. When we add up everything that we spent locally [in 2022], 85% of what we generated in mines stayed in the local economy and only 15% went out to those mines that declared dividends, and then profits were repatriated. That is how we add value to the local economy.

Are there any plans to implement the use of green hydrogen in mining activities in Namibia?

We believe that the biggest impact for us in terms of green hydrogen is having companies that are able to turn ammonia into ammonium nitrate. That is the position I have given to the government. The second use is that we are now producing iron ore, and we have a project that is in concept and that we believe is going to make a breakthrough in green steel. Green steel could contribute to the car manufacturing industry, where you may end up with a green Audi or green BMW because you simply want to take out the factor of fossil fuels. Those are the plans in place, which we are working towards.