Robert Grant, Senior Partner, KPMG

Providing advisory, internal audit and tax services to mining companies in Namibia.

KPMG-BLOGKPMG is the oldest firm of chartered accountants in Namibia, with a presence in the country since 1947. Can you give us a brief overview of KPMG’s history in Namibia and highlight a few milestones from the past year?

Robert Grant (RG): As most service providers in the accounting and legal fraternity, we have undergone several changes. The company consolidated under the KPMG brand name across the world in 1991. We currently have around 65 staff members in Namibia and provide assurance, tax and advisory services to our clients. We draw quite heavily form our expertise across KPMG Africa and most of our skills and expertise come from the two powerhouses, South Africa and Nigeria, which hold most of the skills on the continent.

How strong is KPMG’s focus on the mining industry in Namibia compared to other industries, such as power and oil and gas?

RG: For mining companies we mostly provide advisory, internal audit and tax services. We currently assist Rio Tinto’s Rossing Uranium Mine with internal auditing and tax services and have involvement with BHP Billiton. In terms of ancillary companies, we currently provide auditing and advisory services. There is limited work from an audit perspective given that most mining groups operating in Namibia are international and audit decisions are taken on a global level. We are certainly looking to grow within the Namibian mining sector and recently released a publication to increase our profile. KPMG is looking to get involved in the larger mining projects.

What are the key challenges for investors looking to enter Namibia in the current regulatory environment?

RG: The greatest challenge for investors looking at Namibia is the skilled labor shortage. Most mining houses have their skills brought in from out of Namibia. The second challenge would be the legislative regime around taxes given that mining is the highest taxed industry. Namibian tax rates go up as high as 55% for diamond mining, with additional taxes and royalties added on to that, and other mining operations at 37%. Even in oil and gas production there is an additional profits tax. Namibia is definitely on the upper end of taxes within the region. The third challenge is water, given that the uranium industry is very water intensive. All Swakopmund mines are taking water from the same source, which will cause logistical problems in the long run. Other companies, such as Areva, had to put up a water desalination plant. The fourth and final major challenge is power, given that we have a massive shortage and import around 60% of the country’s total from South Africa. There are agreements between the two countries in place, which will come to an end in the next year and terms will have to be re-evaluated. NamPower is working on some major projects, such as the Kudu power plant.

At what point should a mining company seek advice from an entity such as KPMG as opposed to a bank or a law firm for audit tax and advisory services?

RG: The best time for a mining company to seek our advice would be at the feasibility stage, once they have established there is a feasible deposit that can be mined. They should seek KPMG’s services out specifically for the taxes aspect, so that they do not inhibit the costing of the future mine in any way. We can assist with the major project’s advisory services, looking at the actual construction of the mine and the project management that goes with it, such as best practice and implementation of systems. Once the project is operational, we get involved in the internal assurance service.

Could you speak of the on-going training and assistance KPMG offers to their staff and the role that you play in the advancement of the Namibian economy?

RG: We see KPMG almost as a key training institution for the country, where we train the future chartered accountants of Namibia. We offer a bursary scheme and traineeship program to provide the trainees with all the necessary skills for their future as chartered accountants. We do this to contribute positively to the massive skills shortage in the country. Internally we also provide training within the KPMG world; there is regional and global tax training, as well as a continued effort between the regional offices to ensure that our skills are kept at the highest standard.

What key changes do you expect to see in the Namibian mining sector over the next two years?

RG: The mining industry in Namibia is greatly driven by uranium prices, so that will be a key factor. If prices do rise again, obviously we will see a lot of investment. The next key factor will be not “if,” but “when” we discover oil. Many believe that if it is in Angola, it must be in Namibia, given that the country is driven by similar geography. There is considerable exploration taking place in Namibia, but the minerals we have discovered to date, diamonds and uranium, will be the primary drivers.

Where would you like to see KPMG Namibia over the next year or two?

RG: Continued growth is the key, mostly stemming from the advisory and tax base. Specifically looking at mining operations, in 5 to 10 years from now, if there are many established mines, we will see more assurance services.

This interview was part of the research being conducted by GBR for its upcoming Mining in Africa Country Investment Guide (MACIG) 2015. To participate in this report, please contact Sharon Saylor at ssaylor@gbreports.com.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s