Oil exploration ups a gear as drilling programme starts in earnest

16 March – 16 April 2012

Namibia has a strong track record of attracting foreign investment and many well-known international companies play an active role in a wide variety of sectors including agriculture, fishing, mining, manufacturing, construction, tourism, telecoms and financial services. The Namibian Constitution promotes foreign investment and protects private property. Every month Flamingo brings you a round-up of the most important business and economics news from Namibia put together by Robin Sherbourne of local economic consulting company Namibian Economics. To receive regular updates on the Namibian economy, email robin@namibianeconomics.com

The construction of a N$130m dust-disposal site at Namibia Custom Smelters (NCS) in Tsumeb is nearing completion. NCS Vice President Hans Nolte revealed that NCS is also working on the construction of a new dust-collecting baghouse for the Ausmelt furnace to replace the old baghouse, which has been operational for nearly 50 years.

Oil giant BP is expanding its investment in Namibia by buying into Serica Energy’s offshore blocks as explorers seek oil under a layer of salt off the Namibian coast. The announcement follows hard on the heels of a high-level delegation of BP meeting with President Hifikepunye Pohamba, on which occasion executive vice-president of exploration at BP, Michael Daly, stated that BP is extremely optimistic about its chances to strike oil offshore Namibia.

Air Namibia announced that three new regional routes are being put into operation. People travelling to Gabarone, Harare or Ondjiva (Angola) will be able to fly there directly as from 15 May.

China Guangdong Nuclear Corporation now owns nearly 80% of the Husab Uranium Project after Rio Tinto sold its 14.2% stake in Extract Resources to the state-owned company. According to Rössing Uranium managing director Chris Salisbury, Rio Tinto remains interested in jointly developing Husab as one of the world’s biggest uranium mines.

Ohorongo Cement delivered the first of a thousand loads of bulk cement to the south of Angola. A bulk tanker shipped the load to Santa Clara.

HRT Participações em Petróleo S.A., a Brazilian oil company, advised that Namibia had extended the initial oil exploration period for all its 10 blocks in the African country. The new deadlines are between 2013 and 2015, HRT reported in a regulatory filing.

A boom in construction reflected improved business confidence in February, according to the latest IJG Business Climate Monitor. The index gained 1.7 points, ending the month at 121.3 ­– a slight improvement from 119.6 for January. “Much of the positivity came from the continued willingness of businesses to invest,” advised the Institute of Public Policy and Research that released the index.

NamPower is seeking bidders to build a 300-megawatt coal-fired power plant in its uranium-producing Erongo Region. The objective is to make a final decision on the project by the end of the year. According to Managing Director Paulinus Shilamba, the plant could start producing electricity by 2016.

Investment funds under management in Namibia dropped to N$85.6bn in 2011, lower than the previous two quarters but still about 2% higher than in 2010. Of this, N$43.8bn was invested in Namibia, while N$32.1bn was invested in the Common Monetary Area and N$9.7bn offshore, according to the latest statistics by the Namibia Financial Institutions Supervisory Authority (NAMFISA).

Namdeb has announced plans to develop a new onshore diamond mine in its southern diamond fields, expected to produce 45 000 carats a year. The firm has approved funding totalling N$280m (US$36m) for the construction of the mine at Sendelingsdrift on the Orange River, Namdeb chief executive Inge Zaamwani told reporters. “Production is set to start towards the end of 2013,” Zaamwani stated. It is estimated that the mine will have a seven-year life, producing 45 000 diamond carats a year.

EnerGulf Resources has received approval for the second two-year renewal period for oil exploration on Block 1711 offshore Namibia.

Namibia is facing a power shortage for the first time in its history. NamPower has asked the public to cut the use of electricity by at least 10% to prevent blackouts. The deficit is expected to grow to 150MW at the end of 2013 as NamPower’s power purchase agreement with the Zimbabwean power utility Zesa ends.

The Namibia Diamond Trading Company (NDTC) paid a second dividend of N$40m within six months to the Namibian Government. This brings the total dividend payout since 2007 to N$350m. The NDTC is a 50/50 joint venture between the Namibian Government and De Beers.

Windhoek will soon see the development of a new steel manufacturing plant after the City Council authorised the sale of land for the project to BH Steel Manufacturing. The development includes a manufacturing plant and a distribution centre, which will serve the Namibian and southern Angolan markets.

HRT Participações em Petróleo S.A. has opened a data room in Houston to offer information to oil companies interested in buying stakes in its oil exploration blocks in Namibia, the company reported.

Explosives and relevant accessories will now be more easily available for mines in Erongo with the establishment of Sasol Nitro’s country office in Swakopmund. Sasol Nitro is one of eleven business divisions of South Africa’s mining, energy and fuel giant, Sasol.

Chariot Oil & Gas has spudded the first prospect in its multi-well programme offshore Namibia. The well is only the second ever to be drilled on the offshore Namibe Basin and is Chariot’s first in what will be a four or five-well programme off Namibia.

Namibia has continued to slide down the Global Information Technology (IT) Index of the World Economic Forum (WEF), achieving its second-lowest score since 2007. The county scored 3.35 points out of a possible seven in WEF 2012 reported on IT – below its record high of 3.58 the previous year, ranking Namibia 105th out of 142 countries worldwide.

Eco (Atlantic) Oil and Gas, which has a primary listing on the Toronto Stock Exchange–Venture Exchange, was granted permission by the Namibian Stock Exchange on 20 March 2012, subject to regulatory approvals, to dual list on the Development Capital Board of the NSX on 18 April 2012.

Namibia’s population stands at 2.1m people, an increase of 15% from the 1.8m recorded during the 2001 Population and Housing Census. On average, a 1.5% population growth has occurred annually.

New black economic empowerment charters for electricity, petroleum and the mining sectors are to be introduced soon. The charters would govern or guide companies doing business in the three sectors on the issue of sharing production benefits with previously disadvantaged Namibians.

Development of the Swakopmund La Mer waterfront started on 10 April, after the site was officially handed over to Namibian Construction to start with the civil works. The waterfront development has seen many financial and political challenges over the past decade, and has been handed down from one developer to another, until finally, Safari Investments Namibia managed to close its N$400m deal with the Swakopmund Municipality.

The development of a multi-million dollar shopping complex in Ondangwa is going ahead. Property group Safland Namibia is responsible for the development of the complex, dubbed Gwashamba Mall, on behalf of Frontier Property Trust.

The drive by Glencore International to buy up African mining assets has brought it to Namibia. It acquired a majority stake in the Rosh Pinah Mine, a leading regional zinc and lead concentrate producer, from Exxaro Resources. Glencore acquired an 80.08% share in Rosh Pinah Zinc Corporation.

House prices dropped by 2% in real terms over the year ended January 2012. Indications are that house price inflation will fall significantly this year, according to the FNB Namibia Housing Price Index.

Consumer price inflation in Namibia fell to 6.9% in March compared to 7.4% in February.

This article appeared in the May’12 edition of FLAMINGO Magazine.