Nam lucrative ground for Aussie speculators

Namibia is an attractive destination for small companies that want to expand their mineral portfolios and recent transactions paint a picture of rife speculative deals.

While speculating with Namibian resources is not confined to Australian firms, an investigation by The Namibian looked at the footprint of Australian companies involved in several mega exploration deals in the past decade.

WORRY

Former energy minister Isak Katali admitted in 2011 that Namibia has become an “El Dorado for speculators and other quick-fix, would-be mineral explorers and mining developers.”

“Ownership of Namibian resources is sold through licenses internationally through speculative activities without government deriving any benefits through sales taxes, value added taxes, or stamp duties,” he said.

Licenses are cheap, allowing holders to conduct a preliminary survey at a cost of N$15 000. To apply for an exploration license, a payment of N$30 000 is required. If minerals are found, a 25-year production license costs a mere N$30 000.

Namibia is now amending its laws to change how mineral rights are obtained.

Around 49 licenses in Namibia are owned by Australian companies - two of them are operational.

Many holders appear to have clean records and are well-received in Africa. They include well-known companies as well as small explorers worth less than US$1 million that snap up licenses in the hope of striking it rich.

Former Extract Resources chair and now managing director of RMB Namibia, Steve Galloway, warned the government not to be trapped into authorizing “stock exchange mining” licenses.

“I think government now has a better sense of who is serious and who is not, but there have been a few licenses given to people who did not really have serious intent to put up a mine and that is a key issue,” he was quoted saying by the Windhoek Observer last year.

PHOSPHATE

Australian companies Minemakers and UCL Resources are among the firms that have made millions of dollars from speculative deals in Namibia.

The two companies owned 42,5% each in a joint venture with a Namibian empowerment group, Tungeni Investments, in a consortium named Namibian Marine Phosphate.

Minemakers announced in 2011 that the Namibian government granted them mineral rights to explore for phosphate in Namibian waters for 20 years.

The company’s managing director, Andrew Drummond, subsequently said: “We can now proceed to a higher investment level with the planned bulk sampling and trial mining programme, and the commitment to design work on the dredge mining system. Namibia continues to be a great place for us to conduct a phosphate business.”

A year later, Minemakers sold its 42,5% stake in the project to Arabian firm Mawarid Mining LLC for A$25 million (N$228 million). UCL also sold its 42,5% stake to the same Oman company in 2013.

This means that, within two years, the Australian companies raked in around A$50 million from selling their licenses without adding any value to the economy.

Mawarid Mining is a subsidiary of MB Holding Company LLC owned by Mohammed Al Barwani, Oman’s richest businessman who is estimated to be worth US$1,35 billion by Forbes magazine.

After the Omanis took over 85% of the phosphate deal, directorship of the consortium changed. The billionaire’s youngest son, Tariq Al Barwani became the new director together with Sushil Srivastava.

A new third partner with a 15% share in the consortium is Namibian exploration fixer Knowledge Katti through his company, Havana Investments. Katti has connections that stretch up to the President.

It is not clear whether Katti and his Oman partners will succeed in mining phosphate after the project was rejected by top government officials who feel it is a risky process which has not been tried anywhere in the world. They also fear it would harm Namibia’s booming fishing industry.

Whatever the decision, this deal will have the footprints of Australian companies who started the project and left it a few years later.

URAMIN-TREKKOPJE

One of the biggest speculative deals involved an Australian businessman, Adrian Lungan, who co-owned UraMin. UraMin bought a company that held the mineral rights to the Trekkopje mine in the Namib Desert for US$4 million in June 2005. Three years later, UraMin sold the Namibian mine, together with its mines in two other countries, for US$2,5 billion.

“The first stage of the process - between 2004 and 2006 - was the speculative acquisition of uranium deposits in these countries by start-up mining company UraMin, which cut in people close to political decision makers,” South Africa’s Mail and Guardian reported in 2012.

UraMin is an opaque British Virgin Islands-registered company co-founded by geologist-turned-businessman Lungan. Australian media reported in 2012 that Lungan was based in Hong Kong.

UraMin speculated with perceptions that the Namibian mine had higher uranium grades than Rio Tinto’s long-standing Rössing uranium operation in Namibia.

In 2007, French parastatal Areva bought UraMin at the top of the uranium bull market for US$2,5 billion. This sale included its mineral rights in South Africa, Namibia and the Central African Republic.

Trouble caught up with Areva after the parastatal admitted years later that they overpaid UraMin as the mine was worth half the US$2,5 billion.

The controversial transaction enabled UraMin to rope in political heavyweights in Namibia to get their license renewed so that they could sell the firm.

President Hage Geingob admitted that he helped UraMin renew its license and that the company offered him directorship on the board but he declined.

“I chose to play the role of a consultant. I therefore served as a consultant to UraMin and helped the company secure a license which it already had but which was about to be terminated due to several technicalities. For this, I received payment which was part of an amount of US$300 000,” Geingob said in June.

He said US$200 000 (N$2 million) had gone to two South African partners who brought the matter to his attention, while “US$100 000 was paid to me of which I took US$10 000 to assist a person in need, leaving me with US$90 000,” he said.

“Let me also clear up some facts involving the much talked about sale of UraMin to Areva, which even some Cabinet ministers have been very vocal about. I did not facilitate the sale of UraMin to Areva as some would have you believe,” the President said. “That sale took place on the stock exchange. How does one facilitate a stock exchange sale? “ he asked.

Geingob has been criticized for pushing through benefits such as tax exemptions to Areva after it took over UraMin. Several ministers were against the exemptions.

The Namibian is still waiting for the President to respond to several questions sent to him for clarification on his role in the UraMin deal - such as to who exactly he gave the money and other queries regarding his assets disclosure.

OTHERS

Although companies such as Bondi Mining and Namibian Copper NL have used Namibian resources to raise millions of dollars on the Australian stock exchange, they cannot be branded as speculators.

Bondi Mining, which partnered Japan Oil, Gas and Metals National Corporation, is a state-owned firm.

An Australian stock exchange press statement issued on 8 March 2011 said the firm raised US$3 million to accelerate development of Namibian projects as it had owned five exploration licenses in Namibia since December 2010. The company was merged into another Australian company called World Titanium Resources 10 months after raising N$3 billion on the stock exchange.

Another company that has raised millions using Namibian resources is Namibian Copper NL, which raised A$1,6 million (N$14 million) on the stock market last year. The company announced on its website last month it had been told by the energy ministry that its application for a license renewal had been declined. Namibian Copper NL said they initiated legal action against various parties associated with the loss of one of their prime licenses at Ongombo, approximately 45km to the north-east of the capital city Windhoek.