Namibia Cabinet Clarifies Uranium Exploration And Mining Rights

Published on Tuesday May 03 2011 (AEST)-Australia

Foreign investors sitting on exploration rights in Namibia for years and not developing mines is the reason Cabinet decided to give exclusive exploration and mining rights of strategic minerals to State-owned Epangelo.

Cabinet's decision, which has been causing an investor outcry since Mines and Energy Minister Isak Katali announced it in Cabinet recently, was released by the Ministry of Information and Broadcasting on Friday.

In it, Cabinet said: "The current licence holders have had exploration rights there for a very long time and little progress has been achieved over the years."

Cabinet said it endorsed uranium, copper, gold, diamonds and rare-earth minerals as strategic resources of which Epangelo Mining Company will have the exclusive exploration and mining rights.

Their statement differs from Katali's budget speech he made in Parliament. There he said that uranium, copper, zinc, gold, and coal were regarded as strategic minerals.

After meeting with Katili on Wednesday, the Chamber of Mines in Namibia on Friday released a statement saying "there remain some areas of uncertainty, which the chamber tabled for clarification".

Chamber general manager Veston Malango said the minister assured them that the new policy will not affect current licences for strategic minerals. Existing mining licences, exclusive prospecting licences (EPLs) and mineral deposit retention licences are therefore in the clear, Malango said. The Chamber remains worried, though.

"The Chamber of Mines is acutely aware of the impact that such uncertainty has on the global investment community's excellent regard for Namibia as an investment destination," Malango said, adding that foreign money is "the major source of investment in exploration and mining" in the country.

International sentiment echoed the Chamber's concerns.

Online, The Wall Street Journal on Friday posted an article by The Australian, saying that until last week, Namibia would have ranked "well down the list of probables/possibles" for "an upset in Africa".

Most foreign companies' shares took major hits since the Katali announcement, with only a handful gaining slightly.

"A mixed picture indeed - but so is Africa. And the Namibian development underlines that investors have always to keep that in mind," the article stated.

Reports post on the websites of the Nasdaq, Creamer Mining and Sydney Morning Herald all spoke of nationalisation of Namibia's strategic minerals.

Major international players involved in mining locally have issued statements since Friday, trying to calm jittery investors.

Extract Resources, whose shares plummeted by about 20 per cent since last Thursday, in a letter to the Australian Securities Exchange (ASX) said the company "believes that these statements [Katali's statements] have been taken out of context".

Extract, which plans to develop Husab in the Namib as the third biggest uranium mine in the world, said it "reiterates that the Government of Namibia continues to be supportive of Extract and the Husab uranium project".

Extract still needs a mining licence for Husab and said it was seeking clarity from Government regarding Katali's remarks.

Paladin Energy, miners of Langer Heinrich Uranium, also issued a statement, saying after consultations with Government "it is our understanding that the equity position and operations" of the mine will not be affected.

The Australian quoted Extract's managing director, John Borshoff, as saying that Government's move didn't come as a surprise to the industry, as it was widely known Namibia was looking to create a mining house similar to Canada's Cameco.

"Essentially they want to start at the greenfield sites," Borshoff said.

Similarly, Auryx, developer of the Auryx Otjikoto gold project, said Cabinet's decision will not affect its local operations.

Malango on Friday said the Chamber of Mines "pledges to work with the Minister of Mines to ensure that the mining industry continues to play its critical role in the socio-economic development of Namibia".

The chamber is still waiting for Katali to clarify concerns raised at a press conference as promised by the Minister.

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