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Royalties row in Namibia

One of the many
Namibian mining
operations affected
by the country’s
new tax regime
Windhoek, Namibia — MININGREVIEW.COM — 09 June 2008 – Some mining companies in Namibia have refused to pay the new mining royalties introduced last year, despite the fact that the government and the mining industry had reached agreement on the issue at the time.

Quoting the Namibian Economist published here, allafrica.com reports that this development has left the Minister of Mines and Energy disappointed.

“It is disheartening to note that after the Chamber of Mines and the ministry reached an agreement on the applicability of the Government Notice of 2006 imposing payment of royalties by mining companies, there are still a few companies that continue to defy the directive,” said minister of mines and energy Erkki Nghimtina.

But, chamber president Otto Shikongo hastened to assure the Economist that the refusal to pay was purely from a governance point of view and not a defiance of policy.

“This is purely from a governance point of view and it is not that they don’t want to pay,” he said. “There is some clause in the Government Notice, which needs to be clarified, and once this condition is met, they (the mining companies) will pay the royalties,” Shikongo added. “We, as the mining industry, met and agreed to pay the royalties, however some of our members went back to the ministry to seek clarification on the clause. “We are trying to sort this issue out.”

The new tax was gazetted in November 2004, but the Ministry of Mines and Energy agreed to postpone implementation to last year until the mining companies had been consulted on its affordability and the effect it would have on the future of the industry.

The Namibian mining industry increased its turnover last year by 13% to R13.8 billion from R12.2 billion in 2006, the chamber revealed in its 2006/7 annual report released last week.