Mineral industry of Namibia

Diamond remained the most economically significant mineral commodity produced by the mining industry of Namibia.Philip M. Mobbs. [http://minerals.usgs.gov/minerals/pubs/country/2006/myb3-2006-wa.pdf "The Mineral Industry of Namibia"] . "2006 Minerals Yearbook". U.S. Geological Survey (April 2008). "This article incorporates text from this U.S. government source, which is in the public domain.] The country produced about 2% of the world’s gem-quality diamond, which placed it as the eighth ranked producer of gem diamond in terms of value. Namibia, which is located on the southwestern coast of Africa, also was the sixth ranked producer of uranium, producing about 8% of the world’s uranium in 2006.

Legal framework

Namibia’s mining industry is regulated by the Diamond Act, 1999; the Minerals (Prospecting and Mining) Act, 1992; and the Minerals Development Fund of Namibia Act of 1996. The petroleum sector is governed by the Petroleum (Exploration and Production) Act, 1991; the Petroleum (Taxation) Act, 1991; the Petroleum (Exploration and Production) Amendment Act, 1993; the Petroleum Laws Amendment Act, 1998; the Model Petroleum Agreement, 1998; and the Petroleum Products and Energy Amendment Act, 2000.

In 2006, the Government confirmed a royalty schedule that originally had been introduced in 2004. A 3% royalty was levied on the market value of base, precious, and rare metals and nonnuclear mineral fuels. A 2% royalty was levied on industrial minerals and nuclear mineral fuels.

Minerals in the National Economy

Diamond mining contributed about 8.6% to the gross domestic product (GDP) of Namibia; construction accounted for 3.7% of the GDP, and other mining and quarrying, 3.1%. Mineral exports accounted for a significant segment of trade and foreign exchange earnings.

Production

In 2006, manganese, diamond, and fluorspar output increased by 158%, 24%, and 15%, respectively, compared with that of 2005, and copper, lead, wollastonite, and zinc posted significant production declines. The increase in manganese was attributable to the expansion of production at the reopened Purity Mine (formerly the Otjisondu Mine). The decline in copper output could be attributed in part to instability during the transition of ownership of Ongopolo Mining and Processing Ltd. Lead and zinc output declined in part because of a short strike by workers at the Rosh Pinah Mine.

tructure of the Mineral Industry

The Government encourages private sector exploration and development according to guidelines set out in its 2003 paper entitled “The Mineral Policy of Namibia.” The Ministry of Mines and Energy and its Diamond Affairs, Energy, and Mining Directorates regulate Namibia’s mining and petroleum industries, and the Ministry concerns itself with the provision of national exploration and mining databases and competitive exploration and mining policy and regulations. The Ministry of Trade and Industry is responsible for regulating manufacturing activity, which includes mineral beneficiation, the production of cement, and the processing of semiprecious stones; the Ministry also promotes resource-based development.

The larger mining operations in Namibia tended to be funded and operated by domestic and international investors. Numerous local operations were involved in smaller-scale industrial mineral production, especially the semiprecious gemstone sector.

Commodities

Copper

In 2006, Weatherly International plc of the United Kingdom agreed to acquire 56% interest in financially-distressed Ongopolo; Weatherly subsequently increased its equity interest in the company to 100%. Ongopolo operated the Kombat, the Matchless, and the Otjihase Mines. Ongopolo suspended operations at the Tsumeb copper smelter in mid-2006, relined the 30,000-metric-ton-per-year (t/yr)-capacity reverberatory furnace, and reopened the smelter in August. A second reverberatory furnace at Tsumeb remained inactive, pending renovation.

Ongopolo evaluated the development of an underground mine at the Tschudi copper-silver prospect. Other copper exploration activity in Namibia included that of Copper Resources Corp. of South Africa on the Haib project, Helio Resource Corp. of Canada on the Honib prospect, Teck Cominco Ltd. of Canada on the Kaoko project, and Yale Resources Ltd. of Canada on the Leicester prospect.

Gold

Companies that explored for gold in 2006 included Forsys Metals Corp. of Canada on the Ondundu prospect, Teal Exploration & Mining Inc. of Canada on the Otjikoto prospect, and Teck Cominco on the Vredelus prospect. Yale Resources worked on the Makuru (also known as the Otjimakuru) project.

Lead and Zinc

Contributing to the decline in Namibian zinc output in 2006 was the nearly 3-week fire-related suspension of zinc metal production operations at the Skorpion zinc facility and a strike at the Rosh Pinah Mine for higher wages, which lasted for about 2 weeks and adversely affected lead and zinc concentrate production. Kumba Resources Ltd. of South Africa proposed to reduce its 89.5% equity interest in Rosh Pinah to about 50%. A local investor group, which included PE Minerals (Namibia) (Pty.) Ltd., was expected to acquire Kumba’s divested interest.

Cement

Cement had been imported since the closure of the Otjiwarongo factory of African Portland Cement several years ago. Holcim (Namibia) (Pty.) Ltd., which was owned by Holcim S.A. of Switzerland, 54%, and the Aveng Group of South Africa, 46% (and known as Alpha Cement prior to 2004), imported about 25,000 metric tons per month of cement to meet local demand.

In 2005, Cheetah Cement Factory, which was a joint venture of Whale Rock Cement of Namibia and CP Cimento e Participacoes S.A. of Brazil, proposed to import cement from Brazil until a 500,000-t/yr-capacity cement plant near Otjiwarongo was built. In late 2005, Cheetah Cement imported 36,000 metric tons (t) of cement from Brazil, but most of the cement was lost when Cheetah Cement’s warehouse was flooded in early 2006. As a result, planning for the construction of the new cement factory was suspended.

Diamond

Namdeb Diamond Corp. (Pty.) Ltd., which was a joint venture between De Beers Centenary AG and the Namibian Government (50% each), was the country’s leading diamond producer. During 2006, Namdeb, its contractors, and its subsidiaries produced more than 2 million carats. The partners also negotiated the Namdeb Sales Agreement in 2006, which created the Namibia Diamond Trading Co., to sort and value the volume of Namdeb’s production that would be marketed to the domestic diamond-cutting industry.

Petroleum

Offshore petroleum activity included exploration on Block 1711 by the joint venture of Z.A.O. Sintezneftegas of Russia (70%), Petroleum, Oil & Gas Corp. of South Africa (PetroSA) (10%), EnerGulf Resources Inc. of the United States (10%), and the National Petroleum Corp. of Namibia (NAMCOR) (7%). Onshore exploration included that of the joint venture of Circle Oil Namibia Ltd. (90%) and NAMCOR (10%). In 2006, Mitusi Atlantic Energy BV (15%) joined the joint venture of BHP Billiton Ltd. of Australia (75%) and PetroSA A (10%), which held B Blocks 2813A, 2814B, and 2914.

Uranium

Rössing Uranium Ltd. processed about 12 million metric tons of ore in 2006 and produced 3,617 t of U3O8. Production was exported to the Asia and the Pacific, the European, and the North American markets by Rio Tinto Uranium; Rössing shareholders had no offtake rights.

Earlier this decade, Rössing had announced that the Rössing Mine would be closed in 2009. By 2005, the increase in the world market price of uranium allowed Rössing to plan to extend operations to 2016. In 2006, positive exploration results and continued favorable uranium market conditions allowed Rössing to propose that the mine’s life could be extended to 2021.

In late 2006, Paladin Resources Ltd. commissioned the Langer Heinrich uranium oxide (U3O8, or yellowcake) plant; startup output was not included in the country’s 2006 production data. Paladin expected to ramp up U3O8 production to about 1 1,180 t/yr (2.6 million pounds per year).

Exploration activity and evaluation of uranium mineralization in Namibia in 2006 included that of Bannerman Resources Ltd. of Australia on the Goanikontes and Swakop River prospects, Extract Resources Ltd. of Australia on the Husab project, Forsys Metals on the Valencia project, Metals Australia Ltd. of Australia (formerly Australian United Gold Ltd.) on the Engo Valley and Mile 72 projects, Rössing Uranium on the SH and SK anomalies on Rössing’s mining lease near Arandis, UranMin Inc. on the Trekkopje deposit, and Western Australian Metals Ltd. of Australia on the Marinica project. In early 2006, Xemplar Energy Corp. of Canada acquired Namura Minerals Resources (Pty.) Ltd., which held the Aus, the Cape Cross, and the Warmbad uranium projects. Namura subsequently acquired a reconnaissance license in the Engo Valley area.

Outlook

The long tradition of mining in Namibia has been renewed with the reopening of the Tsumeb-area copper mines and smelter, the opening of the Skorpion zinc project, the expansion of the fluorspar and the gold mines, and the continued offshore diamond development of the past few years. Extensive exploration in Namibia for base metals, diamond, gold, natural gas, and uranium has been attributed, in part, to the rise in world commodity prices. Potentially new mine development and new value-added gemstone cutting and polishing, metal-processing, and other mineral-based manufacturing industries could maintain the mineral sector’s position as a significant segment of the economy of Namibia for the foreseeable future.

With a climate that is among the driest in the world, the lack of water resources will continue to be a constraint on mineral development in Namibia, as will the availability of fuel and electric power. New investment to develop the country’s natural gas resources and harness the hydroelectric power potential, and the recently proposed (2006) introduction of nuclear-powered electricity-generating plants, will influence the future economic growth of Namibia. The expansion of regional transportation infrastructure in northern Namibia could see the Port of Walvis Bay become an alternative route for mineral exports from southeastern Angola, Botswana, and Zambia.

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