Namibia, endowed with abundant mineral resources including critical minerals for the energy transition like lithium and cobalt, regulates foreign mining investment through its Foreign Investment Act and Minerals (Prospecting and Mining) Act.
Notably, the legal framework itself imposes no distinct restrictions on foreign ownership.
However, a government-led localisation policy – applied during the licensing of mineral rights – presents a key consideration that foreign entities must manage prudently.
Laws and authorities
Cheng Jun
Equity Partner
Zhong Lun Law Firm
For foreign investment. Enacted in 1990, the Foreign Investment Act serves as the primary law governing foreign investment in Namibia.
Article 3 stipulates: “No foreign national engaged in a business activity or intending to commence a business activity in Namibia shall be required to provide for the participation of the government or any Namibian as shareholder or as partner in such business, provided that it may be a condition of any licence or other authorisation to or any agreement with a foreign national for the grant of rights over natural resources that the government shall be entitled to or may acquire an interest in any enterprise to be formed for the exploitation of such rights.”
The Namibia Investment Promotion Act was released in 2016, but never came into force. It is now expected to be replaced by the Investment Promotion and Facilitation Bill, drafted in 2021. Pending this change, the existing Foreign Investment Act remains in force as the primary legislation.
Operationally, the original Namibia Investment Centre, established under the Foreign Investment Act, has been replaced by the Namibia Investment Promotion and Development Board (NIPDB).
This new board, operational since 2021, is the key management agency for foreign investment, operating under the auspices of the Office of the President.
For mining development. Under the Namibian Constitution, all natural resources below or and above the surface of the nation’s land within the continental shelf, territorial waters and exclusive economic zone are vested in the state, unless otherwise lawfully owned.
The development of mineral resources is governed by the Minerals Act, which empowers the Minister of Industrialisation, Mines and Energy (MIME) to enforce its provisions and regulate natural resources development.
Crucially, no person may prospect for minerals or mine them in Namibia without a licence granted by this minister.
Foreign investment restrictions
Olivia Hou
Associate
Zhong Lun Law Firm
Ostensibly, Namibia imposes no restrictions on foreign investment, and the mining sector has no formal legal mandates for the localisation of ownership or control of mining development companies.
However, article 3 of the Foreign Investment Act stipulates: “No foreign national engaged in a business activity or intending to commence a business activity in Namibia shall be required to provide for the participation of the government or any Namibian as shareholder or as partner in such business, provided that it may be a condition of any licence or other authorisation to or any agreement with a foreign national for the grant of rights over natural resources that the government shall be entitled to or may acquire an interest in any enterprise to be formed for the exploitation of such rights.”
Therefore, the MIME can attach conditions to licences, requiring holders to meet specific “local requirements” for different categories of mineral licences.
Namibia splits its mining licences into two categories with different local requirement stipulations. Category one licences are reserved for solely locally owned entities and category two licences accommodate ventures with partial foreign involvement.
Category one. This includes non-exclusive prospecting licences and mining claims. Article 25(1) of the Minerals Act reserves these licences exclusively for Namibian citizens and companies solely owned by Namibian citizens (local reservation).
However, in practice, this local reservation policy remains uncertain. The legal definition of a company refers specifically to those incorporated under the 2004 Companies Act, leaving other corporate forms, such as close corporations, outside this restriction.
This has led to a situation where fully foreign-owned close corporations can – and seem to do, with the MIME’s tacit approval – hold licences in this category.
Category Two. This second category includes exclusive prospecting licences, reconnaissance licences, mining licences and mineral deposit retention licences, collectively known as “mineral licences” in the Minerals Act.
While the Minerals Act places no explicit legal restrictions on licence applicants, the MIME has, in practice, attached conditions to mining licences requiring up to 15% Namibian ownership and up to 25% Namibian representation in management.
Previously applied to exclusive prospecting licences, these conditions are now reserved only for mining licences.
The required percentages are not fixed, as the MIME holds discretionary power under article 47(2)(a) of the Minerals Act to attach any conditions to the grant, renewal, transfer or equity transfer of a licence.
Notably, there is no legal avenue to circumvent conditions imposed by the MIME.
In practice, however, some entities adjust their corporate structures to meet the requirements in form – for instance, by establishing employee trust schemes to hold the mandated shareholding.
Foreign investment registration
Foreign companies investing in Namibia’s mining sector must register as foreign investors to qualify for specific incentives. Under the 1990 Foreign Investment Act, eligible investors can apply for an investment certificate.
Issued by the NIPDB, this certificate grants specific privileges, typically including foreign exchange facilities, the right to repatriate profits and capital, right to retain export earnings, and compensation in the event of expropriation.
Takeaway
In summary, Namibia’s mining investment regime is legally open, but pivots on localisation in practice.
Foreign investors must therefore monitor legal developments closely, engage proactively with regulators during licensing, and strategically plan their equity and management structures to ensure compliance and investment security.
Cheng Jun is an equity partner and Olivia Hou is an associate at Zhong Lun Law Firm.
Zhong Lun Law Firm
22-31/F, South Tower of CP Center
20 Jin He East Avenue
Beijing 100020, China
Tel: +86 10 5957 2288
Fax:+86 10 6568 1022
E-mail: chengjun@zhonglun.com
houbo@zhonglun.com
www.zhonglun.com
