MINING IN AFRICA SPECIAL — Namibia offers a variety of

The country of Namibia is one of a growing number of African nations interested in attracting North American mining groups to invest in its mining sector. And it is making the case that companies should not look only at diamonds, which seem to be fashionable these days, but also at opportunities involving other mineral commodities.

Towards that end, the country recently embarked on a geophysical program to enhance the existing data base, and to help promote and stimulate mineral exploration in the country. The country’s mining legislation is a modern piece of legislation aimed at making investment in the country attractive. Namibia, which became independent from South Africa in March, 1990, is a large country comprising 824,295 sq. km. But its population is only about 1.5 million, 150,000 of whom live in Windhoek, the centrally situated capital city.

The southwestern African country has a long mining history, with the first commercial exploitation of copper dating from 1855. The discovery of diamonds near Luderitz was made in 1908.

Other important minerals mined include lead, zinc, tin, vanadium, silver, gold, salt, tungsten, arsenic, fluorite, lithium, tantalite, graphite and germanium. Uranium was a major discovery in 1976 and is still an important contributor to the economy. Semi-precious stones are an important commodity, and the country also boasts of large reserves of beautiful dimension stone (including the rare blue stone sodalite.)

Namibia relies heavily on its mineral exports, and the mining sector contributes an estimated 22% to the gross domestic product and 60% of exports. Revenues from diamonds are particularly important, constituting roughly 11% of the gross domestic product of the Namibian republic. Late in 1994, the government of Namibia signed an accord with De Beers Centenary, which effectively restructures De Beers’ diamond operations in that country.

The principal feature of the accord, which is effective for the next 25 years (and longer, should Namibia’s diamond reserves be as extensive as many believe), calls for De Beers’ wholly owned Namibian diamond subsidiary to be reconstituted as Namdeb Diamond Corp. This new entity will be owned 50% by the Namibian government and 50% by De Beers.

Namdeb will retain the diamond assets, and its shareholders will have equal representation on the board of directors. All diamonds produced will be sold through the Central Selling Organization.

Today, about one-third of diamond production from De Beers’ Namibian subsidiary comes from the sea. This may increase as De Beers has been developing facilities for the commercial recovery of diamonds from areas identified during the past decade.

All of De Beers’ existing mining licences and related rights will be replaced by a new agreement drawn up under Namibia’s post-independence mineral legislation. Certain onshore and offshore areas, deemed not to merit retention for diamond mining and exploration, will be relinquished, although they will remain subject to continuing government security measures. The remainder will be held by Namdeb under either new 25-year mining licences or renewable 3-year prospecting licences, all subject to Namdeb’s pursuing rigorous and environmentally sound exploration programs approved by the government.

The agreement also addresses socio-economic issues, including the possibility of value-added industries being established (such as a diamond-cutting and polishing factory) in the country.

Several other diamond companies have marine concessions in Namibia. Early this year, Diamond Fields Resources (TSE) reported that its joint-venture partner, BHP-BCL, had completed the first stage of a reconnaissance drilling program within an offshore concession.

BHP-BCL has rights to earn a 50.1% interest in Diamond Fields’ 660-sq.-km concession by conducting a feasibility study. This study is based on a minimum annual diamond production of 100,000 carats, with targeted annual diamond production exceeding 200,000 carats.

The recent sampling program returned 207 diamonds, with an average of 0.31 carats per stone and a quality described as “typical of the west coast deposits, which are in the 90% gem content range.” A second-stage sampling program is in progress.