The Chamber of Mines says it is fairly pleased with Namibia’s improved mining performance after the country recorded upgraded rankings on the global investment destination index.
According to the Annual Survey of Mining Companies released by the Fraser Institute, Namibia shifted seven points on the overall Investment Attractiveness Index from 52 in 2021 to 59 in 2022.
However, the country did not perform well on policies, with its absolute score falling by six points from 75 in 2021 to 69 in 2022.
On this index, Namibia was ranked 38th out of 62 jurisdictions surveyed, compared to 59 out of 84 jurisdictions in 2021.
Namibia ranked 6th out of 16 African jurisdictions surveyed on overall investment attractiveness. Despite this, the Chamber of Mines is of the opinion that the country could have performed much better had the announcement and gazetting of the VAT Act of 2022 been known to participants before the survey closed.
The VAT Amendment Act of 2022 was gazetted on December 29, 2022, and became effective on January 1, 2023. The Chamber describes this as a massive win for the industry and strongly believes this could have contributed to a far better score for Namibia’s Policy Perception Index.
The absolute increase in Namibia’s Investment Attractiveness Index score was a result of an improvement on the Best Practices Mineral Potential Index which increased by 12 points from 37 in 2021 to 53 in 2022.
Meanwhile, the contributing factors to a decline in Namibia’s Policy Perception Index were concerns related to unilateral powers to the Minister of Mines to make various determinations like royalty levels and a lack of minerals rights security.
“The decline in policy perception is despite the very positive amendment to the VAT legislation, which now allows exploration companies to register unhindered and claim for input VAT refunds,” said the mining industry watchdog.
The Best Practices Minerals Potential measures a country’s mineral attractiveness which is rated assuming a perfect regulatory and policy environment.
In 2022, Namibia recorded a 12% increase in exploration expenditure in real terms, particularly due to the discovery and active exploration of minerals such as lithium, uranium and gold.
“Namibia’s performance in the 2022 Fraser report is fairly good, although could have been better. This is especially so as the Namibian government has greatly improved legislation that encourages exploration,” the Chamber of Mines President Zebra Kasete said.
The Investment Attractiveness Index measures a country’s overall competitiveness and combines the Policy Perception Index and the Best Practices Mineral Potential Index. The Policy Perception Index carries a weighting of 40% and the Best Practices Mineral Index carries a weighting of 60%.
Chamber of Mines CEO Veston Malango stressed that the Chamber is actively engaging the Minister of Mines and Energy on the Minerals Bill and is confident that the policy concerns cited in the survey will be addressed in the Minerals Bill review which is at an advanced stage.
“The Chamber is positive that the finalisation of this Bill will elevate Namibia’s overall investment attractiveness in the global mining space,” he said.
According to the Chamber of Mines 2022 annual report, Namibia’s mining sector profitability declined by 142% last year owing to cost pressures from mounting local and imported inflation which far outweighed revenue gains from a weaker exchange rate, an official has said.
