At one percent of total annual output, uranium mines alone could face paying as much as N$1.5 billion per year more in taxes to the Namibian Government, industry sources warned this week.
Uranium mines are said to be putting their full weight behind the Chamber of Mines of Namibia, which has just over one week left before having to deliver its opinion on this new proposed export levy to the Minister of Finance, Saara Kuukongelwa-Amadhila. The new export levy is understood to be the opportunity cost to the Government of Namibia as the country still faces a huge deficit in the industrial capacity to add value to its own mineral resources. Most mining produce is exported in raw form.
“The Namibian Government really needs to reconsider this levy on a mineral-by-mineral and mine-by-mine basis,” warned one stakeholder. Informanté sought an industry-wide opinion about the proposed export levy this week. However, since the Chamber of Mines of Namibia will represent the entire mining sector when replying to the Minister of Finance before 30 July, most were only willing to share their general view on the issue and declined to be named personally.
“Every mineral mined and every mining technique used makes us unique, so a fixed export levy is unfair and will do more harm than good,” one stakeholder explained. The entry-barrier is lower to establish value addition industries for diamonds, copper, tin, zinc and even salt or at a later stage possibly crude oil as well. The next stage in value addition or beneficiation to yellow cake in the uranium industry is uranium-enrichment which is a controversial process hampered by complexity, incredibly high development cost and skills shortage, as well as major safety and security issues for countries involved in uranium enrichment.
“We expect a 1% levy on our annual output and if you put Rio Tinto Rössing, Langer Heinrich Uranium, as well as the future Husab Project and Areva Resources Namibia into the equation we will combined pay more than N$1.5 billion in taxes if the levy comes into effect some time in the 2013/2014 financial year,” it was said.
Another stakeholder said he is of the opinion that government should change the emphasis when it comes to value addition to mining produce. “A mine is a mine. Mines never get involved in value-adding, because it is not a core activity”. He suggested public-private ventures to establish a wide spectrum value-adding sector that stands separate from the mining sector. “A healthy mining output and an inviting attitude towards foreign direct investment into value-adding will reap Namibia far more benefits in the long run than eroding mines’ profitability by reformative taxation.
“We had successes so far with diamond polishing. Go and see the strides made in the production of high-value salt products and the country’s fishing industry.” Namibia has proved in the past that it can rise to the challenge, but it should not be at the expense of the mining industry, this stakeholder said. He too echoed the Chief Executive Officer of the Chamber of Mines, Veston Malango’s, recent opinion that this export levy will erode the viability of mines, hamper expansion projects and scare away foreign investors in the mining sector.
Informanté consulted Veston Malango, who confirmed that the Chamber is in dialogue with the overall mining sector and all inputs will form part of their reply to Kuukongelwa-Amadhila on 30 July. Indications are that the uranium sector will defend its stance that value-addition in the uranium mining sector is a tall order and will possibly also collectively try to convince government to shift the paradigm towards establishing a separate value-adding industry to benefit from Namibia’s vast mining output.