Source: Newmont production data, Newmont Annual Reports, 1947 -71.
Compiled by Strom.

Note:

The revenue per ton figure also includes the effect of inflation
and the prevailing world prices of copper.

TSUMEB'S CONTRIBUTION TO SOUTH AFRICAN CONTROL

"If we Tsumeb and Consolidated Diamond Mines 7 had not been operating, the development of South West Africa would not have progressed at all," Manager Ratledge believes.61 He asserts that their taxes have made possible the construction of roads throughout the country. According to Ratledge, the paved road running from Capetown through Windhoek to Luanda (Angola) would never have been completed in northern Namibia without Tsumeb: the company's taxes paid for it and the location of its mines made it important.62 The road is an important part of the South African and Portuguese war effort, since important supplies and troops are transported along it.

Since its inception, Tsumeb has paid more than $140,000,000 in taxes to the South African government. Its $14,000,000 tax payment in 1970, for example, provided about one-quarter of the mining sector's contribution to public revenue and 8.6 percent of the territory's annual budget.64

In the long term, Tsumeb's contribution to continued South African control may be its exploration efforts. The company spends about $1,000,000 each year in an attempt to find new deposits in the territory.65 Discovery of new reserves and a decision to exploit them would deepen the company's involvement in the territory and give its American owners more stake in the situation.

Tsumeb's Profitability

By all measures, the Tsumeb investment has been a profitable one for its owners. Newmont has received dividends totaling $85,737,676, for an average annual return of 372 percent on its original outlay of $1,151, 400. AMAX investment of $840,000 has returned $78,882,483 in dividends, averaging 470 percent per year. (See Appendix B). In 1970, dividend income from Tsumeb provided 13 percent of Newmont's new income and 9 percent of AMAX' net earnings.66 Particularly for the smaller Newmont Corporation, income from Tsumeb has been an important source of capital for expansion. The company acknowledged this debt in its 1971 Annual Report:

"Newmont's share of dividends from Tsumeb and O'Okiep has enabled the Company to consider projects much larger in scale than was previously possible, "67

Much data about Tsumeb is not published, since it is not a publiclyheld company. But in several areas where information has been found, Tsumeb's profit record is good. Compared with other Newmont investments, the company has experienced a high return on sales (sales as a percentage of new income):

Return-on-investment data, available only for recent years, tells an equally favorable story for the company with an overall average of 31 percent.

Various factors influence Tsumeb's profitability. Metal prices, grade of ore, taxation rates, and labor costs are some of the most important.

Since Tsumeb sells its ore on the world markets (rather than through long-term contracts), its earnings are very vulnerable to fluctuations in prices. Throughout the latter part of the 1960's, copper prices in particular remained high for an unusually long period. Their sharp decline in 1971 significantly depressed Tsumeb's earnings. (0'Okiep Copper Company, Tsumeb's South African "cousin," was similarly affected, as were the copper-dependent nations of Zambia, Zaire, and Chile.)

TSUMEB: Average Sales Price Per Ton Ore Mined and Milled71

Tsumeb further has one of the highest grades of ore of any comparable mine in the world, as shown by the following information on ore production,

The Namibian tax structure, as established by the South African government, is another advantage enjoyed by Tsumeb. As shown in the chart, the territory's tax rate is lower than that of the U.S. and South Africa.

A popular view among South African critics is that foreign corporations benefit extensively from the cheap labor created by apartheid laws. But this view is often challenged by corporation officials and apologists. In the absence of sufficient data, either position is difficult to prove.

In a comparison of mining wages in several African countries, Tsumeb's rates are rather low.

While such comparisons have little concrete value because of costof-living variations, they do serve to dispute the claim that Namibian (or South African) workers are better paid than miners in Black-ruled African countries.

To take another approach, the importance of wage rates can be measured by examining the impact of a hypothetical pay increase.

A doubling of African wages would have decreased Tsumeb's net profits by only 12 per cent in 1970, when profits were high. In 1971, when metal prices were comparatively lower, Tsumeb's net profits would have been decreased by 38 percent by such an action.75

One striking indication of the importance of low wages to Tsumeb is revealed in a comparison with South African gold mines.

-

In sum, low tax rates and rich ore important factors in Tsumeb's profitability are distinct advantages resulting from the company's location in Namibia. Another crucial variable, the price of metals, is of course dependent on world conditions. The data presented, though possibly not conclusive, do strongly suggest that Tsumeb's labor costs which are low and are expected to remain fairly stable despite wage increases make a substantial contribution to the corporation's high returns.

* As shown on page 13, Tsumeb's 1972 wages are higher; but even the 1971 figures are 1 to 5 years more recent than the data from other countries, where wage increases probably have occurred.

IV. CONCLUSIONS AND ACTIONS

The basic issue in Namibia is self-determination; it is a point on which nearly all the nations of the world agree. Raising wages, improving working conditions, and other ameliorations of the present system only serve to rationalize the blatant contradictions within it. They do not contribute to the goal of independence. Tsumeb, in defiance of the World Court, is increasing South Africa's ability to resist international pressure and internal unrest. Its earnings contribute foreign exchange, its taxes boost South Africa's budget, its technological expertise adds to white self-sufficiency. And its presence gives the United States a direct economic stake in the territory -- an investment in the status quo.

Klemens Kapuuo is one spokesman for Namibians who claim that the presence of Tsumeb and other foreign corporations can only delay the day of liberation for their country; he is undoubtedly speaking for thousands (who do not have the prominence to be heard or to protect them from reprisal) when he says:

We ask for the immediate removal of foreign mining firms;
we demand that the mineral rights of this nation be pro-
tected to prevent them from being totally removed before
they can be applied to the building up of this country for
the well-being of its people.

Report on Annual Meetings, 1972

78

Newmont Mining Corp. and American Metal Climax, Inc., held their annual meetings in Wilmington, Delaware, on May 1, 1972, and in New York City on May 4, 1972, respectively. The Episcopal Churchmen for South Africa filed identical resolutions with each company, asking for a "full disclosure" of the companies' activities in Namibia and South Africa. Two other resolutions, requesting that the companies recognize the United Nations as the lawful authority in Namibia, and placing Tsumeb's profits in escrow, were disallowed by the Securities and Exchange Commission.

Newmont opposed the resolution for several reasons. 1) The company argued that it was not relevant for stockholders "in arriving at an informed business judgment on the retention or the evaluation of the worth of mining properties." 2) Newmont further argued that the information requested by the proponent 11 'seems designed hopefully to furnish such data as might be used to validate the proponent's assumptions and, if possible, to force abandonment of such investments." 3) Newmont also explained that it had to follow the laws of the land where it did business and that following these laws did not necessarily involve "any position as to the rightfulness or de jure standing of any such authorities."

AMAX recommended a vote against the resolution with the following reasons. 1) The shareholders meeting is "not the place for airing of grievances or the solicitation of general information about the politics of countries within which the Company has investments." 2) The companies in which AMAX invests "comply with the laws of the authorities in de facto control of South West Africa." This compliance does not involve such companies "in taking any position as to the de jure standing of any such authorities."