Lahja Nashuuta
The Ministry of Mines and Energy has been issued a disclaimer of opinion by the Office of the Auditor General, citing poor regulatory oversight and widespread non-compliance in managing gold mining licences.
The audit covered the period from 1 April 2020 to 31 March 2023, focusing on the ministry’s oversight of three major gold mines, namely QKR Namibia Navachab Gold Mine, B2Gold Namibia and Osino Gold Exploration and Mining.
The audit report reveals serious gaps in enforcing the Minerals (Prospecting and Mining) Act of 1992 and Namibia’s Mineral Policy, raising concerns about the ministry’s capacity to regulate the gold mining sector effectively.
The report states that QKR Namibia Navachab Gold Mine (Pty) Ltd failed to comply with Section 50(c) of the Act, which requires companies to cooperate with stakeholders to facilitate skills and technology transfer to Namibian citizens.
Specifically, QKR “did not implement or report on any training programmes during the 2020/21 and 2021/22 financial years,” the report adds.
Moreover, both QKR and B2Gold failed to provide sufficient evidence demonstrating compliance with Section 50(e), which mandates companies to actively support skills development and build local capacity within the mining sector.
The audit uncovered that the ministry failed to enforce Section 7 of the Act, which prohibits ministry employees and their spouses from holding direct or indirect interests in mineral licences.
The auditors said “The ministry had no internal mechanisms to verify employee or spousal compliance,” and information on the spouses of five out of 249 officials was missing, leading to audit scope limitations”.
The auditors cautioned that the lack of internal controls raises the risk that ministry officials might hold stakes in mining licences without detection, undermining impartiality and integrity in regulatory oversight.
Legal limits
Of the 13 Exclusive Prospecting Licences (EPLs) reviewed, six were renewed beyond the legally allowed seven-year period without obtaining ministerial approval, violating Section 72 of the Act.
Additionally, the legally required reduction in exploration areas upon renewal as set out in Section 72(2)(b) was frequently ignored.
Section 72(1-3) of the Act requires that “an application for renewal must be submitted not later than 90 days before the expiry date of the licence.
“If submitted after this period but before the actual expiry, such late applications must be accompanied by valid grounds and are only permissible if the minister allows it,” the report reads.
The auditors further revealed a lack of consistent documentation indicating whether renewal applications were submitted within the prescribed timeframe or, if late, whether valid ministerial approval was obtained.
The auditors found “no evidence of area reduction in the six EPLs renewed beyond permitted limits” and there was no documentation confirming ministerial consent for retaining land areas exceeding statutory limits.
Such breaches compromise regulatory control over mining activities and land use.
The audit flagged concerns regarding the beneficial ownership structures of the major mining companies.
The report reveals that B2Gold Namibia is 90% owned by Mauritian interests with 10% Namibian ownership.
Yet, the company stated 90% Canadian ownership, with no evidence provided to clarify the discrepancy.
QKR Namibia Navachab is 92.5% owned by a multinational company, but no information was provided on the beneficial owners behind this stake.
The report further found that Osino has identified a method and proposed structure that would allow Namibians to hold shares in their flagship Osino project.
This involves the creation of a new public company, Osino Namibia Ltd (“New Osino Co”), which would hold 10+% of the shares in the licence-holder, Osino Gold Exploration and Mining (Pty) Ltd (OGEM), with Osino Namibia Holdings (Pty) Ltd retaining the remaining shares.
The audit report indicates that 10+% shares in the New Osino Co will be held by historically disadvantaged Namibians.
However, the proposed structure did not state how the mining company will meet the requirement of a minimum 20% representation of historically disadvantaged Namibians in the management structure.
Private land
Section 52(1) of the Minerals Act requires mining companies operating on private land to submit written compensation agreements or waivers from landowners.
However, the report states that the auditors did not find any evidence of such agreements or waivers for the operations reviewed.
While the ministry claimed that mining companies own the land in question, auditors argued that it failed to provide supporting documentation, such as title deeds.
“This lack of proof threatens the state’s regulatory oversight and risks unregulated mineral extraction on private properties,” the report reads.
The Auditor General recommends, among others, implementing conflict of interest controls to verify that ministry employees and their spouses do not hold prohibited interests in mining licences.
In addition, licence renewal oversight should be strengthened to ensure renewals are applied for within legal limits and supported by ministerial approvals.
The auditors further propose transparency in ownership by requiring full disclosure of beneficial ownership to improve accountability and safeguard local economic benefits.
– lnashuuta@nepc.com.na