New Era (Windhoek)

11 March 2014

Africa: Namibia Ranked Second in Mining in Africa

Photo: Namibia Economist
Skorpion Zinc Mine

Windhoek — In a recent survey by the Canadian-based research organization the Fraser Institute, Namibia has been ranked the second most favourable investment destination for mining and exploration activities on the African continent. "This means that the investor confidence in Namibia's government is good and most importantly that the security of tenure in Namibia is guaranteed. Furthermore, it means that we have a favourable mining regulatory framework and policies in place," commented the Minister of Mines and Energy Isak Katali yesterday.

Responding to questions on the ranking, the minister said factors that have made Namibia a country of choice for mining and exploration activities include political stability, good infrastructure, telecommunications and trainable people.

According to the survey, Namibia improved its world ranking from 45th out of 93 jurisdictions in 2012 to 30th out of 96 jurisdictions in 2013.

This ranking places Namibia second in Africa after Botswana, which ranked 25th in 2013.

The Fraser Institute's Annual Survey of Mining Companies was sent to about 4 100 exploration, development and other mining-related companies around the world.

The survey, conducted from October 2012 to January 2013, represents responses from 742 of those companies and covers 96 jurisdictions.

The companies participating in the survey reported exploration spending of US$6.2 billion (about N$62 billion) in 2012 and US$5.4 billion (about N$54 billion) in 2011.

The survey indicates that Namibia's improved ratings were attributed to uncertainty concerning disputed land claims (18 percent), availability of labour and skills (13 percent) and uncertainty concerning the administration, interpretation or enforcement of existing regulations.

The survey made use of a Policy Potential Index (PPI), which is a composite index measuring the overall policy attractiveness of the 96 jurisdictions in the survey.

The index is composed of survey responses to 15 policy factors that affect investment decisions and the PPI is normalized to a maximum score of 100.

Policy factors that influence companies to invest include legal processes that are fair, the personal and corporate tax regime, access to roads and electricity, restrictions on profit repatriation, existing trade barriers and political stability. Commenting on this ranking, Rome Mostert, the Head of Research at IJG, a local stock brokerage, said: "The global macro-economic conditions need to support this favourable ranking. Global demand for our resources need to support this conducive investment climate."

Namibia is a world-class producer of gem quality rough diamonds, uranium oxide, special high-grade zinc and acid-grade fluorspar, as well as a producer of gold bullion, blister copper, lead concentrate, salt and dimension stone.

Interestingly, close to half (43 percent) of survey respondents noted that the availability of labour and skills was a mild deterrent to investment in Namibia. In fact, 15 percent said the availability of labour and skills actually encourages investment, while 33 percent said it was not a deterrent to investment and only 10 percent said it was a strong deterrent.

In this latest survey, Africa's average PPI score decreased, continuing a five-year declining trend.

Namibia and Mauritania's ranking improved most significantly while Botswana remained the highest ranked jurisdiction on the continent. Zambia was ranked above South Africa, Russia and China.

Commenting further on Namibia, the survey quotes a local consultant saying: "In Namibia mineral resources data is provided at relatively low cost to industry participants. This creates a junior-senior company level playing field thus encouraging investment. Well done!"

According to the survey, the least attractive jurisdictions for mining investment are Indonesia, Vietnam, DR Congo, Kyrgystan, Zimbabwe, Bolivia, Guatemala, Philippines and Greece.

Both the DR Congo, which fell from 76th to 93rd, and Zimbabwe, which fell from 74th to 91st, dropped significantly in the rankings this year.

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