Chamwe Kaira
Diamond producer, Namdeb’s operations have thus far spent more than N$3.2 billion in the local economy of Namibia in 2022 and capital expenditure of N$1.3 billion is being spent on the ramp up production activities, spokesperson Shangelao Ndadi told Observer Money.
Ndadi said the royalty remission that was agreed upon with the government enabled a N$2 billion capital investment over a period of three years (2022 -2025) in the operations resulting in a 20-year life of mine extension (to 2042) for Namdeb’s land-based operations.
“This life extension has huge positive implications in terms of long-term contribution to the fiscus, economic activity and employment. It furthermore provides numerous addition benefits to the community and region in the creation of secondary jobs, social upliftment and the opportunity to transform the economy of the town of Oranjemund,” she said.
Ndadi said Namdeb would have closed down by the end of 2022, if it was not for the new long-term plan, supported by the royalty remission, approximately 2500 (1550 Namdeb employees ,950 contractors) jobs would have been lost.
“As a result of the intervention, those jobs were retained, and approximately 600 jobs have been created and filled by Namdeb and its contractors. It is anticipated that this number will increase as we continue with the ramp up plans.”
She explained that the royalty remission reduces the royalty rate from 10% to 5% over the first five years of the long-term plan, thus enabling Namdeb to re-invest in new equipment and infrastructure projects as indicated above.
“In the long term, it is expected that this new lease of life for the company will yield a return of more than N$40 billion to the Namibian economy.”
Ndadi said the royalty remission was sought from the regulator by the company, as per the provisions of the enabling legislation, to enable it to develop an economically sustainable business plan to 2042 as an alternative to the closure of the business at the end of 2022.
“The possibility of a royalty remission is an important provision that the government has placed in the legislation, as the diamond mining royalty and taxes are very high (10% royalty and 55% tax respectively). It is therefore an option for consideration to seek relief in times of declining ore reserves or during economic downturns.”
