Namibia’s mines ministry does U-turn on licence cancellation

The Sperrgebiet Diamond Mining Company (SDM), owner of the Elizabeth Bay diamond mine, will live to mine another day after the Namibian mines and energy ministry decided to make a U-turn on its initial decision to cancel its mining licence.

This development comes after the company demonstrated it is willing and able to resume its mining operations, which have been dormant for more than a year.

Mines minister Tom Alweendo notified the embattled mining company earlier in October that the ministry would revoke its cancellation notice.

Ministry officials briefed on the matter said that Alweendo also added the condition that SDM must undertake to coexist with renewable energy players operating in the same area. These include solar and wind power producers and the country’s flagship green hydrogen project.

Alweendo has not responded to questions regarding the ministry’s about turn.

SDM acting CEO Abraham Grobler confirmed the company had reached agreement with the ministry to uphold all its mining licences and terms to coexist with energy projects. He said the company had also already signed an agreement with one of the energy companies and was engaging with the others to ensure government conditions of coexistence were met and that it also started having constructive discussions with the Lüderitz town council.

The officials said after Alweendo notified SDM of the ministry’s intention to close them down on June 25, the company had had several meetings with the ministry and written at least two submissions outlining its revised plan to resume diamond mining. 

These included representations on the company’s new strategy presented to the ministry in August and September. It was during these negotiations that the company also undertook to coexist with renewable energy players using the area without any compensation. 

Ministry officials said the issue of compensation for access to the area in question was the main reason Alweendo had decided to cancel SDM’s mining licence, with the lack of mining being conducted being a secondary consideration. 

Alweendo has now set a deadline of March 31 2025 for the company to start mining again.

SDM’s Elizabeth Bay’s mining licence is situated on a vast piece of land in the south of Namibia that has been restricted for more than 100 years. It is known as the Sperrgebiet. The SDM’s mining licence starts with land on Possession Island, which is just south of Elizabeth Bay and about 40km south of Lüderitz, and goes all the way north to Hottentot Bay, which is about 62km north of Lüderitz.

This means that even the land between Lüderitz airport and the town is part of the mining licence, which prohibits the town from expanding further east. This is despite the town booming due to the oil finds off the town’s shores. 

The same area where the mine is located has also been identified as a strategic location to house wind and solar generation projects as well as the country’s green hydrogen project operated by Hyphen Hydrogen Energy. 

This area is considered strategic for the renewable energy projects because it hosts what is known as the wind corridor. 

Ministry officials maintain that key stakeholders made allegations that SDM attempted to extort them in exchange for access to the area. A 30% stake in the wind and solar energy projects was allegedly demanded, while Hyphen was allegedly informed that it should pay an annual rental fee of €10m.

A person involved in the renewable energy projects in the area confirmed that they had problems with SDM, which refused them access, thus impeding their project’s progress. However, Hyphen CEO Marco Raffinetti, in September denied any dispute between Hyphen and the mining company. 

Media reports in July stated the mining company found itself mired in several disputes, including a court dispute with mining contractor Lewcor Mining. While the government was adamant that the company was not fulfilling the obligations and requirements set out in its mining licence, including that mining had been suspended over an extended period. 

Grobler said mining would resume within a year and that the dispute with Lewcor had been resolved and the parties had amicably parted.