The publication in March of the *Thirion Commission Report on Mining* has revealed evidence of the extensive overmining and depletion of Namibia's mineral resources by multinational companies. The Commission was originally set up in November 1982 by the then Administrator-General to investigate irregularities in local and regional government. Its brief was later extended to Namibia's mining industry. Consolidated Diamond Mines (CDM), the territory's largest mining company which has a monopoly of the diamond mining industry in Namibia, refused to testify before the Commission. In part this was because it feared that publication of information about its marketing strategies would affect its position in the international diamond market. (Star 6.3.86)
The findings of the Commission were withheld from publication for six months by the MPC administration. When they were publicised they confirmed research by SWAPO, the United Nations and anti-apartheid groups over the years that Namibia's mineral resources have been systematically depleted by multinational companies on a scale which would leave a future independent Namibia depleted of its mineral reserves. These activities are also contrary to Decree Number one of the UN Council for Namibia, which excludes the extraction and export of Namibia's minerals without authorisation of the Council. (Star 6.3.86)
The Commission found that CDM had overmined its holdings, as had the Tsumeb Corporation (TCL, which mines base minerals such as copper. Tsumeb is under joint South African - United States ownership and CDM is a subsidiary of the South African mining group, de Beers (which in some years has derived 40 per cent of its profits from its Namibian venture).
The Commission also found that the terms of reference of official bodies such as the Diamond Board, the Mining Inspectorate and departments of customs and excise were vague. These bodies are charged with monitoring the nature, quantity and value of minerals extracted and assessing export tax on stones leaving the territory. Through practices such as transfer pricing by multinationals, combined with incompetence and neglect by officials, a situation arose whereby some mining companies paid minimal tax on their operations and were able to stockpile vast quantities of Namibian minerals outside the country, against a future rise in international prices.
One of the major findings of the Thirion Commission was that CDM had engaged in a policy of overmining diamonds. CDM was given exclusive rights to mine the mineral rich 'Sperrgebiet', along the coast south of Oranjemund, under the Halbscheid Agreement. Drawn up in 1923 and extended in 1941 and 1953 the agreement allows CDM to retain its monopoly until the year 2010. The agreement stipulated that high and low grade diamond bearing ore be mined in equal proportions to extend the life of the existing resources. The Commission found that CDM had taken a policy decision in the 1970s to increase production levels in breach of these provisions and to concentrate on the mining of high grade ore at the expense of low grade ore.
Between 1963 and 1983 there was 'excessive depletion of reserves in several specific years'. According to evidence submitted to the commission by a former employee of CDM and by a special investigator, four new ore crushing plants were installed at Oranjemund to exploit the high grade ore. The company worked around the clock with three eight-hour shifts per day. Ore treatment increased from 8.5 million tonnes in 1967 to 16.9 million in 1980. CDM's revenue increased by 66 per cent in the '1970s. (Nam 7.3.86; WA 6/11.3.86; Star 10.3.86)
Roughly half of the stones exploited in this manner were stockpiled in Kimberley in South Africa against a rise in world diamond prices. In further evidence to the Commission it was submitted that the deposits at Oranjemund would be exhausted by 1991, leaving only low grade ore deposits which it would be economically unviable to mine. It was estimated that these practices had resulted in the loss of R2,65 billion in diamond ore reserves. (Star 10.3.86; WA 10.3.86)
Overmining and other abuses of Namibia's mineral resources occurred partly as a result of the failure of official bodies such as the Diamond Board, Inspectorate of Mines and customs and excise to exercise effective control. The Diamond Board was installed to regulate and monitor diamond production and assess and collect duty on exports. Under Proclamation 17 of 1939 the Board is required to take custody of diamonds from producers and sell the stones on their behalf. At the same time the Board determines the value and export tax applying to them. In practice the majority of the members of the Diamond Board are CDM employees. The Secretary of the Board, a CDM employee, is charged, for example, with assessing on behalf of the state the export duty liable to CDM.
The Commission found that sales of diamonds leaving Namibia were not independently recorded. Export duty was only paid on the sales claimed by the Central Selling Organisation which regulates the quantity of diamonds sold on world markets. In this way diamonds exported from Namibia and stockpiled for future sale were excluded. Production statistics furnished to the Board gave details only in gross carats, and failed to account for other factors, such as size and shape, which heavily influence the price of diamonds.
Little control over the export of diamonds and other minerals was exercised by Namibian customs and excise officials. They failed to check the contents of consignments against export permits, taking only their mass into account. In 1983, for example, TCL exported material designated as copper and lead ingots, which in fact contained 69,734 kg of silver and 22,184 kg of gold smelted down. In a similar way 110,000 tons of uranium-bearing ore were exported designated as 'mineral samples'. (WA 6/7/10.3.86; WO 8.3.36)
Evidence was also submitted to the Commission that it was a common practice for CDM and de Beers to swap Namibian gem quality stones for similar weights of lower grade diamonds mined by de Beers' South African operations. These were subsequently allegedly exported as Namibian produce.
Export permits returned to the Mining Commission in Windhoek were filed away and were not correlated with information collected from other sources about the nature or quantity of minerals.
Evidence submitted to the Commission showed that mining companies benefitted extensively from favourable tax concessions afforded by successive South African-appointed administrations. In spite of mineral sales totalling more than R128,31 million in 1980 alone, TCL had not paid any tax on its Namibian holdings since 1979. It was able to claim its investments in two other mines against its tax liabilities.
Mining companies have made extensive use of transfer pricing to increase their profits. Transfer pricing is a practice whereby one subsidiary of a multinational purchases the services or products of another subsidiary and is able to declare these as expenditure against tax liabilities in the territory where it is based. By shifting capital among its subsidiaries the multinational company as a whole benefits.
The MPC Administration has yet to formulate a reaction to the report. In the meanwhile, figures published for the 1985 profits of the major mining multinationals indicate that their Namibian ventures remain highly profitable. De Beers group profits improved by 95 per cent, those at Rossing Uranium by 263 per cent and TCL earned a net income in the first six months of 1985 of R8,206,000 compared to a net loss of R3,902,000 in the corresponding period of 1984. (FM 14.3.86; WA 19/29.4.86)
