Annual Review The Chamber of Mines of Namibia Vision for the Mining Industry Vision for the Namibian Mining Industry is to be widely respected as a safe, environmentally responsible, globally competitive and meaningful contributor to the long term prosperity of Namibia. Vision for the Chamber To be acknowledged as the champion of the exploration and mining industry in Namibia. Mission To effectively promote, encourage, protect, foster and contribute to the growth of responsible exploration and mining in Namibia to the benefit of the country and all stakeholders. Core Values • Integrity • Transparency • Accountability • Compliance Table of Contents 3Chamber of Mines Annual report 2016 5 Structure of the Chamber 9 Highlights of 2016 10 Foreword from the CEO 11 President’s Report for 2016 20 Mine Safety in 2016 23 Review of Operations 67 Mines under construction 71 Exploration Companies 83 Mining and the Economy 88 Annex 1: Key Statistics 88 Output by Mine 90 Permanent Employment by Mine 92 Mining and the Economy 94 Tax Revenue 97 Annex 2: Chamber Members and Committees in 2016 102 References 103 Abbreviations Council of the Chamber of Mines K. Kapwanga (President) Sakawe Mining Corporation J. Coetzee H. Mbako (1st Vice President) (2nd Vice President) QKR Namibia AREVA Resources Namibia M. Dawe S. Solomons O. Shikongo I. Simaata C. Horn W. Duvenhage B2Gold Namibia Langer Heinrich Namdeb Holdings Skorpion Zinc Rosh Pinah Zinc Rössing Uranium (Pty) Ltd Uranium (Pty) Ltd Limited Corporation (Pty) Ltd Corporation (Pty) Ltd Limited Zheng KePing A. Snyman C. Thomas B. Munro D. Kullmann H. Schütte Swakop Uranium Salt & Chemicals Weatherly Mining Bannerman Mining Valencia Uranium OHORONGO (Pty) Ltd Namibia Ltd. Resources Namibia (Pty) Ltd. Cement (Pty) Ltd. V.Petzel Z. Kasete E.D.G Mueller S. Januarie H. Nolte V. Malango B2Gold Namibia (Pty) Dundee Precious Namibian Institute Imerys Gecko Imerys Gecko Chamber of Mines Ltd (Chairperson - Metals Tsumeb of Mining and Holdings(1st Co- Holdings (2nd Co- (Ex-Officio) Chamber Exploration Technology opted Member) opted Member) Committee) Chamber of Mines Executive 5Chamber of Mines Annual report 2016 Committee President First Vice President Second Vice President CEO Kombadayedu Johan Coetzee Hilifa Mbako Mr Veston Malango Kapwanga (Sakawe (QKR Namibia) (AREVA Resources Mining Corporation) Namibia) Chamber of Mines Structure Chief Executive Officer Veston Malango Economist Accountant Personal Assistant to CEO HR Administrator Lauren Davidson Hilma T. Nampala Doreen Meyer Signa K. Ndombo Institutional Worker Caretaker Drieka M. Skrywer Junias Nahambo Mines in Namibia 7Chamber of Mines Annual report 2016 ¨ Dordabis Iron mine Namagra Quarry Highlights for 2016 9Chamber of Mines Annual report 2016 1. Mining Sector made a direct •Turnover > N$28.85 billion (N$25.28 contribution of 11.1% to GDP in 2016, billion in 2015) but contracted by 6% in terms of real value added (NSA Preliminary •Wages and salaries > N$4.15 statistics). billion (Excluding Swakop Uranium) 2. Tschudi copper mine, trebled •Exploration spending by operating Namibia’s refined copper cathode and exploration companies > production. N$510.92 million 3. B2Gold’s Otjikoto gold mine •Corporate tax paid > N$1.75 billion posted record production. (N$2.35 billion in 2015) 4. Through a Joint Venture •Royalties paid > N$1.45 billion partnership, Imerys Graphite and (N$1.41 billion in 2015) Gecko Namibia continued the •Total taxes paid > N$3.21 billion development of the Okandjande (N$3.76 billion in 2015) graphite mine which is scheduled for production in April 2017. •Chamber members directly employed 9,574 permanent 5. Salt & Chemicals inaugurated individuals, 669 temporary their salt expansion project, which employees, and 5,400 contractors would boost salt production from (2015: 8,853 permanent 700,000 tonnes to 1,000,000 tonnes employees, 716 temporary by 2018. employees, and contractors 9,423). 6. Tests work conducted in six phases on Bannerman’s Heap Leach Demonstration Plant yielded results far exceeding benchmarks in the optimisation study. Foreword from the CEO Through the formulation of NDP5, the Chamber identified significant opportunity for investment in the manufacturing of inputs into the mining sector, such as components for processing plants. The mining sector spent 41% of its revenue on locally procured goods and services in 2016, which presents itself as an appealing business case to manufacture some of these inputs. This is one of the many examples in which the mining sector provides critical In the last seven years, the Chamber Namibia’s ranking has fallen a mass for the advancement of other in partnership with the Government further five places to ninth position. industries. For such investments to has worked relentlessly to ensure The proposed empowerment policy occur, however, a favourable and that Namibia remains an attractive and legislation, the New Equitable conducive regulatory environment destination for investment in mining Economic Empowerment Bill is of utmost importance. and to ensure that this sector, one (NEEEB) and Additional Conditions which underpins economic growth to licences were cited as the main Furthermore, the mining sector, in Namibia, continues to divulge drivers for the ranking degradation. through its comprehensive maximum economic benefit for the Corporate Social Responsibility country. A raft of policy proposals programmes has already made in 2011, which if implemented, “In the most recent 2016 significant contributions to the would have been severely survey, Namibia’s ranking achievement of a number of goals detrimental for the mining sector, and targets in the Harambee resulted in major uncertainty and has fallen a further five Prosperity Plan and National angst among existing operations, places to ninth position.” Development Plans. This comes at a exploration companies and _________________________ time when Government is strapped potential investors. Thankfully, the to achieve these targets alone, and Government retracted the worst of the need for strong collaboration these proposals and in productive This comes at a time when the between the private and public cooperation with industry worked Namibian economy finds itself sector is more prominent than ever. towards establishing a conducive in a vulnerable situation, where regulatory framework, which drew Government debt levels are at over N$40 billion in investment to Effective partnerships are not the 42% of GDP, surpassing sustainable the sector. This ultimately led to only pillars of saving grace in the thresholds. Government has thus the development of three new years to come. What is required is had to reign in the spending through mines. In 2014, the Fraser Institute an environment in which privately fiscal consolidation measures which Survey of Mining Companies ranked owned businesses, and thereby have already started to play its Namibia as the most attractive mining companies, can flourish course through job losses in the destination for investment in mining without having to comply with construction sector, and sizeable and exploration on the African restrictive regulatory requirements. contractions in others. Despite continent. The attractiveness of the Namibian having recorded a contraction mining sector, along with others of 6% in 2016, the mining sector Sadly, however, the tides have will continue to be eroded remains resilient and continues to reversed and we find ourselves should uncertainty around the be the stronghold of the Namibian in a similar situation as in 2011. In proposed pieces of legislation economy, with ample opportunity the 2015 Fraser report, Namibia and policies continue, especially for expansion in mineral production dropped three places ranking during a time where the Namibian and value addition potential as the fourth most attractive economy cannot afford to forego through associated linkages. destination for mining in Africa. new investments and business In the most recent 2016 survey, opportunities. Foreword from the CEO President’s Report 11Chamber of Mines Annual report 2016 Safety uptick in core inflation signalled Painstakingly, the mining industry growth in the local economy. suffered another two fatalities in Global recovery, however, is now 2016. Martin Shilompoka, a machine threatened by protectionist and operator at B2Gold’s Otjikoto gold inward looking policies as a vey mine, sadly passed away on 22 likely outcome of these two hallmark January 2016 after being trapped events. between a dozer and diesel truck during a refuelling operation on 2016 was a volatile yet successful 28 December 2015. Just when we year for the gold price, which thought the year was almost over, recorded an increase of 28.8% a second fatality occurred at between January and July 2016 Namdeb’s Southern Coastal mine as the safe haven asset was well on 12 December, 2016 when a sea sought after in an unpredictable wall on which Likius Shetunyenga, global climate. Following the a multi-skilled dozer operator was Brexit vote and Trump’s victory, working, collapsed and caused the the gold price posted sharp dozer and operator to submerge declines, returning to US$1,145/kg below water. at the end of 2016 when the Fed We are grateful to the full support signalled towards a rate hike and We express our heartfelt we receive from the Chief Inspector the Trump administration adopted condolences to the families and of Mines and his team. We remain a pro-growth policy focusing on friends of the deceased employees. optimistic