Dr Elias Shanyengana Consulting Administrator of the MDF Dear Editor Allow me to express our gratitude for your concurrence to publish this brief note in order to rectify recent misrepresentations of the MDF’s role in the Asis Far West shaft development as reflected in an article – ‘Namibia’s most expensive hole’- in the February 2006 issue of Insight, and to provide a synopsis of the operations of the MDF as well as future plans designed to facilitate participation of Namibian, and by example other Africans, in the now-promising mining sector. Notwithstanding the commendable corrective Q & A recently published in the current Issue of Insight magazine to address the incorrect reportage on the above, the MDF thought it fit to publish this related article, and equally, to use the opportunity to expound on the operations and ambitions of the MDF so as to inform a broader readership as represented by your Newspaper (… accounting to the ultimate shareholders of MDF as represented by Government – the electorate). The Case of the Asis Far West Shaft It was incorrectly reported in the afore-mentioned issue of Insight magazine that …….. a) “… Asis Far West Shaft … was initiated using public money from the MDF…” b) “… Many see the episode as an inevitable consequence of what happens when public money is used to finance a project which becomes politicised due to its ‘national, or strategic’ importance and commercial considerations fly out of the window” In response to the above, I would first and foremost like to clarify that the Asis Far West shaft project was not financed by MDF but rather by the European Development Fund under the 7th EDF (= European Development Fund). This was done with the purpose of alleviating the then imminent adverse socio-economic impacts anticipated from the liquidation of TCL. The financing was in-line with EDF objectives, and indeed, with their over-arching objectives as set out in the LomÃÆ’Æ‘Æ‘ÃÆ”šÃ‚© Convention which, among others, primarily aim to: – reverse the then disturbing trend of unfavourable developments in the mining sector by stimulating and broadening the latter, and – also serve to increase and or secure levels of employment and economic activity in the mining sector within ‘ACP’ states (ACP = African Caribbean & Pacific) and also to bring about synergies with European partners and clients. It is therefore in light of the above objectives that MDF feels that the EDF contribution (less than 15% of the total cost of the development) succeeded in meeting the desired objective of securing jobs at Ongopolo, and indeed, also served to inject starting capital into the then newly-created and yet under-capitalised MDF. Indeed, all EDF mining projects, including the Asis Far West shaft, injected significant new capital into the MDF which has ever since benefited a number of other local mining ventures and programmes through direct MDF support (see below). Also note that the MDF did not partake in any exercise to ‘convince’ government and local financial institutions to finance the shaft as inferred in the said article. To date, the MDF has assisted more than 40 mining ventures to initiate and/or consolidate their operations particularly during their most critical times – e.g. financing of additional mineral resources identification to expand and/or avert liquidation of mining ventures and subsequently securing government’s multi-million dollar tax earnings from these ventures; as well as securing/creating additional employment opportunities. Of all the MDF-supported ventures, about 87% are flourishing, and range from large operations such as Rosh Pinah and Navachab Gold to relatively smaller operations such as Okorusu Fluorspar, Usakos Wollastonite, Wittreich and a variety of even smaller BEE operations in the dimension stone, diamond and mineral recovery and processing sectors. In all, the MDF’s success in financing sustainable mining operations over the years is self-evident judging from the successful sourcing of funding through the EDF as well as the numerous successes illustrated by the above-mentioned interventions. In addition, the repayment rate of MDF loans which is currently in excess of 95% also bears clear testimony to the above appraisal. It should, however, be noted that the MDF has extremely limited financial capability in relation to the sort of capital required to make significant contributions to the larger local mining sector. Consequently, we are continuously re-doubling our efforts to source more capital both locally and internationally through potential international financing and development partners. Overview of the MDF The recent past of a protracted downward trend of mineral stocks has decimated a number of global mining operations. This poor performance of mineral stocks also explains why stock market-based capital-raising options were not particularly feasible for most mining ventures until the recent upsurge in mineral stocks (ca. 2 – 3 years ago) that saw international mining companies raising meaningful capital for their operations in money markets. Indeed, such mineral stock market options did not even exist until a few years ago {NB: even the renowned Alternative Investment Market (AIM) of the London Stock Exchange (LSE) only opened in 1995}. The earlier-stated poor performance of mineral stocks, the consequent unavailability of capital to support mining ventures as well as the desire to realise meaningful beneficiation from local mineral resources propelled progressive governments such as ours and other global institutions to establish mining facilitating schemes such as the MDF in the case of Namibia. Moreover, the Namibian Government created the MDF through an Act of Parliament not solely for the purpose of financing local mining ventures but also to facilitate development of the local professional and technological capacity to exploit our natural resources endowment. To this end, the MDF spent a significant proportion of its resources on geological explorations and mapping of the country’s mineral resources which has substantially increased knowledge on the country’s mineral abundance and distribution. This has subsequently facilitated local investment in the sector by both local and international mining companies, and equally contributed to revenue generation for the MDF through other avenues such as geological data sales. The MDF was also tasked with equipping and strengthening the capacity of local mining training institutions such as the Namibia Institute of Mining & Technology (NIMT). To this end, the Fund equipped NIMT and provided bursaries for new intakes over a three-year period. In total, the fund has thus far financed more than 80 scholarships for Namibian students in mining-related fields at local and regional tertiary institutions in order to enhance the national professional and technical capacity that would facilitate growth of the mining sector. New Opportunities for Local Mining Ventures Lastly, in recognition of the prevailing relatively ‘long-term’ average upsurge in the commodities and minerals markets, the MDF has also recently commissioned a study along the lines of our earlier Insight-published mining supplement (August 2006) to advise local mining ventures on how best to raise capital on stock markets. This programme would also seek to establish strategic partnerships and mechanisms with prominent stock markets, internationally acclaimed ‘nomads’ (nominated advisers) and brokers so as to ease the listing of Namibian-owned mining operations. This programme is envisaged to equip Namibians with the knowledge and technical aptitude required to raise capital internationally, and also establish a mechanism and strategic partnerships with international stock markets particularly AIM that would facilitate access of such markets by local companies. The latter will ultimately help to reverse the ongoing trend whereby international outfits are currently using similar channels to raise capital and acquire majority shareholding in local mining ventures, and by so doing, lessening the participation and revenue-generation by local institutions particularly broad-based empowerment outfits in local mining ventures. The envisaged programme would shift the current unfavourable equilibrium towards a more equitable participation by local entities – an essential ingredient in the process of ensuring local earnings from this sector and ultimately, the transformation of our economy as envisioned in our national development aspirations such as enshrined in Vision 2030. The MDF publishes quarterly progress reports on all activities and performance of the Fund and its beneficiaries that are availed to the MDF control board, the line ministry (Ministry of Mines & Energy) and ultimately to Parliament. Plans are currently underway to publish an abridged compilation of the reports into annual summary reports for larger public consumption. Additional information can be accessed at: http://www.mme.gov.na/MDF