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Namibia Mining Report Q1 2012
Business Monitor International, Dec 2011, Pages: 72
Namibia Mining Report provides industry professionals and strategists, corporate analysts, mining associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Namibia's mining industry.
A report commissioned by the Namibian government in Q411 has found that mining remains the basis of the country's economy. The report by economist Robin Sherbourne found that the mining sector had out-invested the government since 2002. Sherbourne found 90,000 Namibians are directly dependent on mining, and that mining and quarrying accounted for 8.8% of GDP in 2010 and 53% of incoming foreign currency. The report was commissioned after recent criticism of the mining sector's economic contribution to the country. Namibia's mining sector is forecast to expand by more than 85% in value terms between 2011 and 2015, and is expected to experience an annual average real growth of 8.1% over the period. Downside risks to our forecasts remain, however, with an increase in industrial action and problems surrounding power supply being potential obstacles to growth.
Weatherly Driving Copper Expansion
Following a return to operations during 2010-2011, Weatherly International revealed further possible expansion in copper production in Q411 with news that the company was in initial talks with banks to secure financing for the Tschudi mining project, the company's third copper mine in Namibia. The company has appointed Australia-based advisory group Noah's Rule to arrange funding for the project.
Tschudi is expected to undergo construction in 2012 with a view to starting production from 2013. The project contains a measured and indicated resource of 25.2mnt (mn tonnes) grading 0.92% copper, according to Weatherley. Initial output at Tschudi is expected to be 8ktpa, rising to 11ktpa (thousand tonnes per annum) in its second year of production, 2014. Further growth in Namibian production may arise from Weatherley's Tsumeb Tailings projects, which is reported to contain copper reserves of 113kt. The company is currently considering plans to develop the project either single-handedly or as a joint venture (JV) with the possibility of production beginning as early as 2012. Regulatory Developments Namibian miners have reacted positively to the news that the government had changed its mind regarding a proposed mining tax increase, reports All Africa. The government will not raise the corporate income tax rate for the non-diamond mining sector from 37.5% to 44%, as was considered.
The decision was taken following close consultation between miners and the government. Namibia's Ministry of Finance had previously announced that it plans to raise the country's existing mining tax from 37.4% to 44% in a bid to strengthen government revenues in a period of marked volatility. The increase would not apply to the country's diamond sector. BMI believes the decision not to increase taxes will ultimately prove beneficial to the growth of Namibia's mining sector. Industry workers in Namibia had warned finance minister Saara Kuungongelwa-Amadhila that investor flight could be a serious issue if the increased taxes were introduced.
Key Players
The bulk of exploration and mining in Namibia focuses on diamonds, uranium and base metals such as copper, lead and zinc. A number of major players, including Rio Tinto and De Beers, have exploited the great potential for the exploration and mining of mineral resources. Diamond Fields International is a Canada-based mining firm involved in exploration and mining of diamonds, nickel and gold in Liberia, Madagascar, Namibia and Zambia. Namdeb is a JV between De Beers (50%) and the Namibian government (50%), and is the nation's leading diamond producer. Vedanta Resources is a major Indian-based resources player with global reach. The company recently entered the Namibian market via the acquisition of the country's largest zinc mine, Skorpion Mine, through its subsidiary Sterlite Industries.
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