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From the deep shaft mine the company obtains copper, lead, and zinc, as well as lesser quantities of cadmium, silver, arsenic, and germanium.

In 1955 a new 3,000 foot shaft yielded its first ore. A $25,000,000 expansion program in the early 1960's included construction of a copper smelter and a lead refinery and smelter. Presently, the company is spending about $2,000,000 to deepen the shaft at Tsumeb and thus extend the life of the mine. Otherwise, the "jewel box" is expected to dry up within 12 to 15 years.

Tsumeb opened a second mine in 1962 at Kombat, some 65 miles away. Like the Tsumeb facility, Kombat has its own concentrator, power plant, and ancillary facilities. The copper and lead concentrates produced there are sent to Tsumeb for smelting.

The third Tsumeb mine, opened in 1970 near Windhoek for $5,000,000 was Matchless mine -- a marginal copper-producing venture which yielded pyrite as a by-product. Previously Tsumeb had to import this sulfur-containing iron ore for its smelter. In January, 1972, during the strike, Tsumeb closed the mine and transferred 400 workers to Kombat and Tsumeb Matchless' profits, and according to Manager Ratledge- the strike further exacerbated the problem.

to meet labor shortages. Low copper prices had eroded

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During the first fifteen years of operation, capital expended on, original outlay and later improvements by Tsumeb totaled $58,000,000. From 1964 through mid-1970, new investment amounted to over $20,000,000. ́ Tsumeb's total $76,000,000 capital investment was financed by reinvested earnings, with the exception of the $4,000,000 purchase fee and a $3,000,000 60 bank loan.

Production figures for Tsumeb show that it has produced 13,568,585 tons of ore during 23 years of operations.

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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 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 possi-, ble 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 per66 cent of AMAX' net earnings." 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):

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

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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. (O'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 Milled 71

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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,

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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.

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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, Tsuneb's rates are rather low.

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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.

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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.

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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.

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