Free carry shareholding in the spotlight

Announcement sends ripples through international stock exchanges
The Fraser Institute said the announcement contributed to Namibia's score in its annual Policy Perception Index for 2023 decreasing 20 points.
STAFF REPORTER
  • 3 Months Ago
Namibia’s intention to introduce free carry shareholding, to be held by the state in Namibian mines, was introduced by mines and energy minister Tom Alweendo in parliament in March 2023, and reiterated before the Parliamentary Standing Committee on Natural Resources last June in Swakopmund.

The initial announcement sent ripples through international stock exchanges, where many Namibian mining endeavours are listed. More recently, the Fraser Institute said it contributed to Namibia’s score in its annual Policy Perception Index for 2023 decreasing 20 points from 87.22 in 2019 to 68, dropping Namibia from position 14 out of 76 jurisdictions, down to 33 out of 86.

According to mining commissioner Isabella Chirchir and her deputy Erasmus Shivolo, the suggestion is still in development, and discussions with the ministry of finance are ongoing. Shivolo made reference Epangelo, the government's mining enterprise, which enjoys preference for strategic mineral licences and holds 10% of the massive Husab uranium mine, and 7.5% of Navachab gold mine, among others.

Chamber of Mines of Namibia CEO Veston Malango said the policy proposal is on the table, and the chamber has been engaging the minister and the mining ministry since it was introduced. Further clarity is needed, he said, adding that the chamber is working on models to present to government, which will detail the consequences of a free carry policy for mines.

“We have highlighted that free carry is an additional cost. The final decision should be informed by well-researched models. The objective is obviously more benefits from the mineral resource coming to government. The question comes in: Will you have more with that scenario than what you are getting right now?"

Malango recently told parliament that in the last five years, the industry paid close to N$9.7 billion in royalties to government, export levies worth N$1.32 billion, dividends of N$3.4 billion and corporate tax of N$11.44 billion, all amounting to N$25.84 billion in government income.

“Our minister has proposed to us, and we have accepted, that these discussions must firstly be at a technical level, between the executive director of the ministry of finance, the executive director of ministry of mines and ourselves, and that is where we are,” he said.

“Hats off to our government that they don’t just come and decree, but it is a proposal that has been put on the table, and now it is subject for engagement,” he said.