The extractive industry, when properly managed and regulated, has the potential of catalysing the development of a country, and improving the welfare of its people. Namibia remains a key destination for extractive-related investments, as seen in the influx of foreign investors pumping money into projects such as the B2Gold and Swakop Uranium (Husab) mines. It is therefore not surprising that the mining industry remains the backbone of the Namibian economy with a 9.3% contribution to GDP at 2014, which figure is likely to rise if Namibia climbs the ladder to become the second largest producer of uranium in the world after Kazakhstan. In addition, the recently signed De Beers Sales Agreement, which sees the newly formed sales and marketing company Namibia Desert Diamonds (Namdia) sourcing market-related prices on the international market, will add an increased N$6.73 billion annually to the economy.
It has become a norm for the growth of the mining industry to be equated to big mining operations extracting commodities such as gold, diamonds and uranium, with acronyms such as EPL (exclusive prospecting licence) and ML (mining licence) alone creating the perception or notion of “immediate wealth acquisition” at their very mention. However, while government’s attention has been focused on these key commodities, its lack of proper regulation and the neglect of other minerals considered “of low interest” has seen the mining industry being robbed of key resources, which could otherwise have catalysed the growth of the industry. What I am alluding to is the small-scale mining (SSM) industry.
Broadly speaking, a common definition for SSM has not been adopted but locally it refers to mining activities using low technology or minimal machinery, usually with low financial inputs. The extraction process is usually associated to the exploitation of small ore bodies considered “uneconomical” for large-scale mining, and these mining areas (called mining claims) are granted ONLY to Namibian companies or Namibian individuals, who are holders of non-exclusive prospecting licences (NEPL). For the above reason, it is not surprising that the application process for NEPLs and mining claims is not as rigorous as that of EPLs and MLs, costing a mere N$50 for affordability purposes.
Countrywide, there are between 5 000 to 10 000 small-scale miners scattered around the Erongo, Kunene and //Kharas regions. However, when one looks at the minerals/stones falling within the mandate of SSM activities, it is surprising to see that such minerals/stones are still considered “uneconomical”. These include high value semi-precious stones such as tourmaline (green, blue and multi-coloured), garnet (green and orange) and aquamarine, while low semi-precious stones include rose quartz, amethyst, agate and topaz. Most of these semi-precious stones are popular in international markets such as Europe and the US for jewellery-making purposes, and others including dioptase make good collector’s stones. Metal ores such as copper, tin and tantalum ores are also minable, as well as dimension stones such as African blue sodalite and marble, which are popular in the Asian markets for ceramic purposes.
The attitude given to SSM in terms of legislation and regulation within the Namibian context has made the industry vulnerable to illegal mining on a large scale. Foreign investors have seen the gap in using local small-scale miners to exploit these minerals, and take advantage of their desperation for a quick buck to make off with huge profits undetected. These companies enter into joint ventures with these miners, including in these contracts monopolistic provisions, which deprive miners of an equal payload. Due to the remote locations of these activities, some miners “lease” out their mining claims (albeit illegally) to companies for peanuts (for example, N$100 000 per annum), while these companies make off with huge profits for providing the technical and technological know-how (that is, excess of N$10 million per annum) for extraction purposes. After chipping and chiselling for months using basic tools, some miners even trade stones for maize meal and other necessities, highlighting the extreme levels of desperation and exploitation they face.
Factors contributing to the above include lack of technico-mining knowledge and lack of advisory services, which force miners to carry out ad hoc operations, largely by guesswork and trial and error. As a result, mineral resources that could otherwise have been mined more efficiently by medium- to large-scale mining methods are sometimes rendered non-viable by small-scale activities. Lack of adequate equipment, such as drilling and pumping machines, also leads miners to abandon their deposits prematurely, once hard rock or water is encountered. Further, SSM receives no credit facilities due to risk associated with the nature of business, and lack of formal market structures results in miners selling their stones below market value. Exploitation at its best was witnessed in the Kunene Region when a Chinese company mined the rare African blue sodalite (which at one point fetched US$47/kg) from a local small-scale miner’s claim to the tune of about N$700 million, and left the miner with nothing but empty promises, empty pockets and an exploited mining claim.
However, the above can become a thing of the past if the SSM industry receives a face-lift by formally recognising it as a key player within the mining industry. Integration of laws to mimic those used in SSM success stories such as Tanzania and Ghana should be considered, and there should be co-operative efforts between the public and private sectors to make SSM a success. The recently held Opuwo investor conference is an example of a private initiative, which saw much-needed attention being drawn to the Kunene Region as an untapped oasis of investment opportunities, further highlighting the importance which SSM associations can play in harbouring the collective interests of small-scale miners.
For instance, the mandate of the Kunene Small Scale Miners Association (KSSMA) will see it serving as a focal point where the interests of small-scale miners are articulated and represented on matters pertaining to SSM in the Kunene Region, Namibia, SADC and the world at large. It will foster development and management of SSM within the region, promote the social economic interests of its members through coordinated support strategies, provide services to its members based on sound business principles, and leverage investment opportunities for its members while ensuring that the region is uplifted through corporate social responsibility initiatives. Members will also be introduced to market related prices for their products, enticing local participation through a collective commitment to do away with illegal mining, and will consequently seek to end the leap-frogging of local laws by investors at the expense of uninformed miners.
The paragraphs above are evidence of the significance of SSM in Namibia and the potential it has of becoming the driving force behind the fight against poverty as envisaged in the Harambee Prosperity Plan. SSM has a high potential of contributing to economic development through the empowerment of disadvantaged groups in rural areas, and can improve the livelihoods of those dependant on it. If properly funded, organised and administered, the SSM subsector can significantly reduce the prevailing high unemployment rate to acceptable levels and improve the quality of life for many in the regions.
By using regional associations as a medium, the government, through the Ministry of Mines and Energy can engage communities by way of consultations on the importance of sustainable mining activities to protect the environment, and offer support through the allocation of subsidised mining equipment, as well as health and safety training. In fact, initiatives such as building a sodalite cutting, polishing and processing plant in the Kunene Region should be implemented, thereby ensuring job creation and the upliftment of towns such as Opuwo. Imagine the impact a portion of the stolen N$700 million worth of African blue sodalite could have made on the communities within the Kunene Region had it gone through an association such as KSSMA, or other regulated channels.
The time to wake up and act is now, before our resources are stolen from right under our noses.
*Stanley Kambonde is the Founder and Managing Director at Esel Kay Consultancy, a consulting and advisory firm specializing in the natural resource and energy sectors. He holds BJuris and LLB (Honours) degrees from University of Namibia, and an LLM in Oil, Gas and Mining from Nottingham Trent University, UK. He can be reached at [email protected]