Environmental Assessment of the NMP Sandpiper Phosphate Project

Namibian Marine Phosphate (Pty) Ltd Media Statement – Thursday, June 23, 2016 Environmental Assessment of the NMP Sandpiper Phosphate Project.

Project Outline

Phosphate and Role of Phosphorus Phosphorus is the 11th most common element on earth and is fundamental to all living things. It is vital for food production since it is one of the three critical nutrients (nitrogen, potassium and phosphorus) used in commercial fertilizer. Phosphorus cannot be manufactured or destroyed, and there is no substitute or synthetic version of it available. Agriculture is therefore heavily dependent on mined rock phosphate and derived fertilisers to support crop yields. Phosphorus reserves are only present in some regions of the world. Other parts, such as Europe, India and Australia are almost totally dependent on imports of phosphate rock.

The Sandpiper Project Namibian Marine Phosphate (Pty) Ltd (“NMP”) is is developing the Sandpiper Marine Phosphate Project (“Sandpiper Project”) and is the holder of Mining Licence ML 170, located 60 km offshore from Meob Bay on the central Namibian coast and 120 km southwest of Walvis Bay. The Mining Licence Area is 2,233 km2 in extent and lies in water depths between 190 and 345 metres. ML170 contains an estimated 1.8 billion tonnes of phosphatic sand with an average phosphate (P2O5) content of approximately 18%. Tests completed by an internationally accredited agency, the International Fertilizer Development Corporation (IFDC), confirm that the Namibian phosphate concentrate at 27.5% P2O5 is suitable for use as a direct application fertilizer (“DAPR”) and that the quality ranks within that of the top 3 global producers of DAPR. The phosphate concentrate can also be used to produce a range of other fertiliser and animal feed products.

Area size and location NMP has identified a target production area within the ML170 which is approximately 60 km2 in size (representing 2.7% of the ML170 area. Area to support operations for 20 years at an annual output of 3Mtpa phosphate concentrate annually, dredging will take place over very small fraction (3km2 or less than 0.15%.) of the ML170 area. The scale of disturbances is significantly less than that caused by diamond mining (dredging) and bottom trawling on an annual basis.

The target production area is located in water depths greater than 200 m and therefore does not lie within the <200m prohibition zone for bottom trawling, designated for the protection of fish spawning and recruitment.

Project Economics To date, NMP has expended in excess of N$780 million in developing the Sandpiper project which has been used for exploration, environmental, technical and feasibility studies, administration and local employment. Key commercial aspects of the project are as follows:

• Project development is estimated at N$5.2 billion in investment capital, making it one of the single largest investment projects the country
• expected annual revenues of N$4.2 billion and
• Annual Estimated taxes and royalties of N$728 million contribution to the national fiscus.
• The project will generate significant opportunities for direct and indirect employment and spin-offs for SMEs and other sectors of the economy.
• +/-450 Namibians to be employed in the first stage of development.
• +/-160 persons required in full time to run the operations in Walvis Bay (57 skilled and 103 semi-skilled/unskilled positions) with opportunities for skills transfer and development Statement Motivation NMP is making the following statement to address the recent media articles which include emotive, unsubstantiated and sensationalized claims or allegations by various parties which are factually incorrect and/or wholly unsupported by specific scientific data. As a consequence of such the Namibian public is being misinformed, either deliberately or by default. The advantages and associated risks related to the proposed operation in ML170 for the Sandpiper Project have been fully and properly documented through the regulated statutory processes in place and managed under the authority of the Ministry of Environment and Tourism in collaboration with other key ministries. This includes and is not limited to ensuring:
• full compliance with current environmental and mineral legislation
• adequate detailed and scientifically substantiated environmental work has been carried out
• independent reviews by accredited Scientific Peers and Independent Reviewers, all of whom have expertise in the Benguela Large Marine Ecosystem and who understand and can evaluate the possible impacts on the Namibian ocean environment. Currently, those opposed to development of a new industry in Namibia are basing their campaign and justification for a moratorium on phosphate mining by promoting the fear that there is a lack of scientific knowledge and/or that due and proper scientific and regulatory process has not been complied with.

One of many examples of these circumstances, is well demonstrated in the media reports carried in The Namibian newspaper where statements on due process and availability of information issued by the Confederation of Namibian Fishing Associations (CNFA) on 16th May 2016 prompted an immediate and strong response by the Environmental Commissioner Dr.Theofilus Nghitila on 17th May 2016 in order to provide the correct facts.

Similar inaccurate statements or allegations have been made in regard to the nature and quality of the environmental studies being desktop studies or having a lack of site specific data and analyses as well as related impacts on the fishing industry. Contrary to these allegations, there is in fact a substantial body of existing and new scientific environmental knowledge based on on-site studies in the ML170 and target production area along with internationally accredited independent expert opinion on the environment and potential impacts for development of the marine phosphate industry

To date, NMP has not engaged in the ongoing public debate in the media on this matter out of respect for the Government of Namibia and in compliance with the Government’s wishes while the Government goes through the rigorous internal processes that they are required to complete, supported by gazette regulations and legislation for addressing the scientific and environmental matters that require due consideration.

Government Capacity and Experience

In this regard we note that Namibia is already an acknowledged world leader in the area of marine mining and environmental management having for the past 2 decades operated the world’s first, largest and most technically advanced underwater mining fleet of vessels which now produces over 1 million carats of marine mined diamonds annually. The reason for this is that Namibia is also the first and only country in the world where concentrations of diamonds on the seabed are high enough to support the on-going commercial marine diamond dredging and mining operations at this scale on a sustained basis.

Therefore, while there are some who seem to be questioning the Government’s ability and handling of this matter, NMP has full confidence in the integrity, capacity and wisdom of the Government of Namibia to assess and manage the responsible development of another new marine mining industry within the framework of its existing Environmental and Mining laws and in co-existence with the Fishing Industry.

A summary of the comprehensive permitting and environmental assessment processes that have been undertaken by NMP over the past 6 years since issue of ML170 to address the requirements and concerns of the Government, the industry stakeholders and the Namibian public at large are provided herewith.

Policy to invest, explore and mine

The Namibian government has long upheld policies for attracting and promoting foreign investment capital for the development of mineral and industrial projects in Namibia. Mineral exclusive exploration licenses (EPL’s) are awarded and funds invested on the understanding and expectation that if successful in defining a viable project, continued efforts will ultimately lead to application for a Mining License (ML) and subsequent development of a mining operation.

In this regard, exploration for marine phosphate in Namibia is not a recent event. Exploration licenses for marine phosphate were initially awarded by the Government and assessment projects undertaken in 1993/1994 by Gencor and again in early 2000’s by Ocean Phosphates Consortium (Namibia) (Pty) Ltd. As such since 1993, the intention to conduct exploration activities for the potential discovery and development of a marine phosphate resource was known to all government agencies associated with the issuance of mineral licenses or related environmental management as well as related interested and affected parties.

Summary: Exploration, Mining License and EIA Process

The due process followed by NMP in regard to exploration, subsequent award of ML170 and related EIA/EMP submission per Government regulation is as follow:

• 2008, NMP effectively commenced development of its Exclusive Exploration Licenses in full compliance with the requirements of both Ministry of Mines and Energy (MME) and Ministry of Environment and Tourism. (MET). Activities and exploration expenditures continued for 5 years culminating in delineation of a world class phosphate deposit off the coast of Namibia in 2011. During this time all mandatory exploration and environmental reporting obligations to the authorities were met. Initial marine environmental benthic baseline surveys commenced in 2010.
• July 2011, following application, NMP was awarded a mining license (ML170) to recover industrial minerals. The inter-ministerial panel adjudicating the award of a mining license comprises representatives of MME, MET, Ministry of Fisheries and Marine Resources and Ministry of Finance.
• 2012 a full Definitive Feasibility Study was completed and results disclosed publically
• 2012 a fully compliant Environmental Impact Assessment (EIA) and Environmental Management Plan (EMP) was completed in accordance with the Environmental Act 2007 and submitted to MET
• 2012 requirement from MET for further consultation with Interested and Affected Parties fully completed in related meetings in Swakopmund. Timing and work programme for the EIA Verification discussed and agreed. MET external specialist review of EIA completed.
• 2013/2014 Verification Programme completed in collaboration with MFMR, MME and MET. MFMR staff participation in Fisheries component of Verification Survey activities. International independent Peer Review completed.
• 2015 MET external specialist review of Verification Study completed.
• 2016 Workshop with Environmental Practitioner, Consultant team, Peer Review Panel representative, MFMR and MET to present Verification Study results and deal with final remaining issues.

In this regard the Environmental Commissioner has confirmed that NMP has complied fully with the Environmental Act 2007 including all mandatory obligations for public engagement prior to submission of the Environmental Impact Assessment (EIA) in 2012 as well as an additional subsequent engagement with a group of Interested and Affected Parties (including the CNFA, specific fishing associations, NGO’s and Ministry of Fisheries and Marine Resources), completion and submission of the Verification Study in 2014 and

all subsequent requests and engagements with government agencies in 2015 and 2016 to facilitate their requirements for the thorough assessment of the NMP application.

Environmental Assessment Process

Details of the comprehensive environmental due process undertaken over the past 6 years is as follows:

1. EIA 2012: In accordance with the Mining Licence (“ML170”) conditions, NMP is required to obtain an Environmental Clearance Certificate from the Ministry of Environment and Tourism (“MET”). Consequently NMP engaged a reputable consultancy to prepare and submitted an Environmental Impact Assessment (“EIA”) and an Environmental Management Programme (“EMP”) in accordance with the provisions of the Environmental Act of 2007. An independent team of specialists was appointed to manage the EIA process and to assess the potential impacts arising from extracting the phosphate ore from the seabed.

The EIA that was completed in 2012 which concluded with a consensus of expert opinion that impacts were in the low range at the scale of the proposed phosphate dredging operations, with no significant impact on commercial fisheries or the environment at an ecosystem level. The team of specialists concluded that there was no objective reason why dredging should not proceed under carefully monitored conditions.

The level of confidence for this set of assessments ranged from Low to High as a function of the available data for each of the impacts assessed. Consequently, the legally and contractually binding EMP submitted along with the EIA included provision for a “Verification Study” to be completed prior to the commencement of dredging operations to obtain additional in situ sample data in order to increase the level of confidence in relation to the impact assessment cases.

1. EIA Review 2012: In its assessment of the EIA, the MFMR was concerned that, despite expert opinions presented by the specialists there was insufficient site-specific information to fully support some of the potential impact assessments. In this regard MFMR was not prepared to accept the provision in the EMP for completion of a Verification Programme prior to commencement of dredging, to gather supplementary baseline information to confirm and raise confidence levels of the EIA assessment.

2. Further Consultation with IAAP’s: Following submission of the EIA, the Environmental Commissioner (EC) required NMP to conduct a period of further consultation with Interested and Affected Parties (IAAP’s) including MFMR. Two specific meetings were subsequently held with IAAP’s in June and September 2012. The meeting in June was

attended by representative of the fishing companies and associations as well as various NGO’s and government agencies. As an outcome, MFMR required that certain aspects of the physical oceanography, biogeochemistry, benthic ecology, and fish and fisheries be further investigated on a site-specific basis as part of a Verification Programme before an informed decision could be reached on the EIA.3. Independent Review 2012: The Independent Review of the EIA, commissioned by the Environmental Commissioner in 2012 under Section 45 of Environmental Act 2007 concluded that “completion of the Verification Study would go a long way to closing out the remaining concerns”. This view was supported by the Environmental Commissioner and in the subsequent meetings held in June and September 2012 with interested and affected parties including MFMR and CNFA. Consequently, NMP elected to proceed with completion of the EIA Verification Study in line with the recommendations.

4. Verification Study 2012-2014: The full Verification Study work programme was expanded and finalised in close collaboration with MFMR and NatMIRC scientists to include certain of their additional specific requirements at an additional cost. The final work programme costing in excess of N$14.0m was approved by MFMR and then circulated to MFMR, MET and MME prior to commencement of activities. The field sampling and marine survey activities were completed during 2013 and 2014. The fisheries studies were completed with approval of MFMR and participation of MFMR personnel in survey operations. The outcome of the Verification Study enabled specialists to adjust their level of confidence in the 2012 EIA assessment from low/med to HIGH, which occurred in all cases without exception.

5. Additional and New site specific data: The Verification Programme was undertaken over a two-year period and required the mobilization of three separate marine surveys to undertake the various studies within and around the primary production and dredging site – SP-1 including:

• Oceanographic instruments to measure currents, temperature, salinity and oxygen
• gravity cores to obtain samples for biogeochemical analysis to determine the potential for dredging to cause the release of hydrogen sulphide and heavy metals into the water column.
• Grab samples to determine the presence of large sulphur bacteria and the nature of the benthic animal community inhabiting the upper layers of the sediment.
• The first-ever systematic analysis of meiofauna was also undertaken.
• A geophysical survey comprising multibeam and side scan sonar was conducted to define seabed character and confirm the absence of deep-water corals or other such habitats.
• Biodiversity Survey, MFMR approved trawls to assess biodiversity using a monkfish trawling vessel and net modified by lining the cod ends with a finer mesh net in accordance with specifications set by MFMR to determine the nature of the epibenthic community i.e. those organisms living on the surface of the seabed and to sample the fish communities present with a particular emphasis on commercially important species.
• a survey of the sea birds and marine mammals observed during field

operations.

A commercial trawler was chartered from the fishing industry for this purpose with approval from MFMR for the proposed work programme as well as participation of 2 MFMR representatives on board the vessel during the fieldwork.

6. Independent Observer 2013/2014: The University of Namibia was appointed as Independent Observers for all verification programme activities to confirm compliance with the verification programme and QC/QA of the scientific data quality and analysis. The UNAM monitor commented as follows:

“As a UNAM representative in this whole verification programme, I am of the conviction that NMP has thus far conducted the most comprehensive scientific studies in their MLA. These studies have addressed uncertainties that were raised by the MFMR and beyond.”

7. Independent Peer Review 2014: On completion, the various Verification Specialist Studies were submitted and subjected to a rigorous critical assessment in an Independent Peer Review process comprising a panel of internationally acknowledged, respected and accredited experts in the Benguela Current Large Marine Ecosystem (BCLME) to ensure that the scientific findings were sound. The re-visited EIA conclusions were then assessed to ensure they reflected the results obtained in the Verification Study. The Independent Peer Review Panel was selected independently by the appointed Environmental Practitioner and the Internal Advisor. The Verification Programme demonstrated that the conclusions drawn in the EIA (2012) were sound and the key consequence of the Verification Programme is that the level of confidence in the EIA conclusions is now established as being high.

The independent international expert review panel concluded as follows:

• “To conclude, the review team is impressed by the quality of the information provided to it and believes that all avenues and disciplines of concern relating to the proposed operation in SP-1 have been addressed adequately.
• The policy decision on whether to proceed is a national one, but we (peer review team) can say that the information provided to us has convinced us that everything points to there being a minimal impact of the proposed operation, should a licence be granted, to the Namibian shelf ecosystem”. The Verification Programme represents one of the most comprehensive research programmes ever conducted for an EIA in Southern African waters. It has contributed substantially to the knowledge of the Namibian continental shelf environment.”

8. Submission and Review 2014: The Verification Study report was completed by the Environmental Practitioner and submitted to the office of the EC in December 2014 as well as the Independent Peer Review Report, completed by the Co-ordinator of the Independent Peer Review Panel.

9. External Specialist Review 2015: In accordance Section 45, Environmental Act 2007, the Environmental Commissioner appointed an External Specialist Reviewer to assess the findings of the Verification Study and International Peer Review findings. This report was completed in October 2015. NMP is not at liberty to disclose the recommendations of the

External Review report which was commissioned by the Environmental Commissioner other than to indicate that the completion of the Verification Study has satisfied the original recommendations made by the External Reviewers assessment of the 2012 EIA. The External Review report on the Verification Study, as we understand was circulated by the Environmental Commissioner to all key ministries in accordance with the provision of the Environmental Act 2007.

10. Follow up Engagement: NMP was recently required to make all key verification study specialists and a Peer Review Panel representative available to attend a meeting with MFMR and MET to discuss the findings of the Verification Study and to address all remaining concerns/issues from MFMR in order to assist decision makers in their assessment.

Government Assessment and Due Process:

As per the Environmental Commissioner’s statement on 17 May 2016, a joint recommendation from MET and MFMR will now be put to the Cabinet Committee on Trade and Economic Development. Reporting on statements by the Chairperson of the Cabinet Committee, Hon. Minister Tom Alweendo, the article in the Namibian on 11th Feb 2016 notes that: “The Cabinet committee was then tasked to investigate whether marine phosphate mining will be harmful to Namibia’s marine life or if it can co-exist with fishing”. The article notes further that “He (The Chairperson) said the decision will be guided by proven research as parties involved such as the fisheries, environment and mines ministries have representatives on the committee. The committee will only make recommendations on the way forward to Cabinet. Cabinet, which is chaired by President Hage Geingob, will decide whether to approve the recommendations made by Alweendo and his team”.

The Namibian Minister of Environment and Tourism the Hon. Pohamba Shifeta reportedly told The Namibian (report of 10/12/16) that “the role of the Ministry is to assess whether there will be any danger if phosphate mining is allowed”.

The article in the Namibian on 11th Feb 2016 notes the statement by the Chairperson of the Confederation of Namibian Fishing Associations (CNFA):“Amukwa said the fishing industry is not against marine phosphate mining but wants to be put at ease that the mining will not negatively impact on the country’s marine ecology.”

Government agencies (MFMR, MET, MME) have been engaged in assessment of the environmental studies for the project for a period of more than 4 years since the submission of the original EIA in 2012.

The Government now has available to them all of the scientifically supported environmental reports by acknowledged specialists based on in-situ samples, analytical data and facts as well as independent expert opinions that address the key issues and

concerns that have been noted and that can facilitate their informed decision on the matter.

The EC has advised that any affected or interested parties wishing to view the associated reports as prepared and provided by NMP, the third party consultants and Peer review panel are welcome to contact the offices of the Environmental Commissioner where full access to the various reports will be provided.

The clear consensus of independent expert opinion is that at the scale of the proposed operations, the project can be safely developed and also be well managed within the existing Namibian mining and environmental regulations without impact to fishing resources and in co-existence with the Fishing Industry.

NMP stands by the conclusions of the EIA and EMP as supported by the findings of the Verification Study and the Peer Review Report, where the underlying findings confirm that “The policy decision on whether to proceed is a national one, but we (peer review team) can say that the information provided to us has convinced us that everything points to there being a minimal impact of the proposed operation, should a licence be granted, to the Namibian shelf ecosystem”