Sector to create 710 new jobs
THE equalising of revenue scales between companies and countries has been a major bone of contention for many African countries in mining legislation.
In its newly introduced income tax amendment bill, the Namibian government aims to amend the definition of “gross income” with regard to the specific inclusion of foreign income to provide for specific taxation of trusts and provide for penalties for tax evasion and to provide for incidental matters, etc.
However, the Chamber of Mines insists that if the proposed changes to the Income Tax Act are implemented, they will have devastating consequences for the entire mining industry.
Lauren Davidson, Economist at the Chamber of Mines of Namibia, elaborates that to date, the Chamber and mining industry are still in consultations with the Ministry of Finance and has established an inter -Ministerial Committee to consult with industry on the proposed changes and to agree on an amicable way forward on this issue.
Davidson states that certain amendments will make most mines unprofitable, meaning they will most likely scale down production and may end up in care and maintenance with inevitable job losses.
She added that worse still, no new investors may come to Namibia under such a drastically changed tax regime.
“This will have a negative impact on other sectors of the economy, particularly the supply chain, as mining is one of the largest contributors to Namibia’s national income and Gross Domestic Product. However, the Chamber is optimistic that the matter will be resolved amicably as government has assured us that such unintended consequences as sketched above are not the objective of the tax proposals,” Davidson stated.
Touching on challenges the industry faces, Davidson said at a macro level, the sector’s most prominent challenge at the moment are fluctuating mineral commodity prices, which have fallen from their high prices at the beginning of last year.
“Geopolitical developments have made trading in a number of commodities more expensive and raised uncertainty in the market for mineral commodities. The uranium market continued to be depressed, forcing Langer Heinrich mine to go into care and maintenance, unfortunately, with job losses. Furthermore, commodity volatility in the second quarter has had a negative impact on some start up mines which have also been forced into care and maintenance. As mentioned, another big challenge for the industry is policy uncertainty, especially with proposed changes to the Income Tax,” Davidson stressed.
She, however, added that the sector has exciting developments taking place in the industry with the re-opening of two old mines.
The Namib Lead and Zinc mine near Swakopmund are set to enter into production in January 2019 and the Uis Tin mine is being re-opened by a new investor, thereby breathing new life into the otherwise economically depressed community.
In addition, the new cement plant by Whale Rock Cement is completed and has commenced with the mining of limestone and cement production.
While there were 822 retrenchments last year, the sector is expected to create 710 new jobs with new operations and re-opening of previously closed mines alluded above.