Mining Sector performs amidst challenges

By Rosalia David
December 2016 & January 2017
Other Articles

Despite the current slump in commodity prices, Namibia continued to attract investment in the mining sector and contribute significantly to the growth of the economy.

Although this year’s budget was also presented at a time when the prices of commodities have been depressed and in some cases have declined to levels that threaten the viability and sustainability of some of the prospecting and mining operations, slowdown in emerging and developing economies the sector has proven to perform on its best despite the challenges.

The industry managed to contribute N$25 Billion in export earnings and N$1 Billion that was derived from royalties during the 2015/2016 financial year.

Even though the continued declining commodity prices and weak demand for exports was suspected to negatively impact on Namibia’s own real Gross Domestic Project (GDP) growth as well as inflation rate, the mining sector, also initiated robust plans to construct new power plants for short, medium and long term to avoid electricity shortages in future.
Surely if this initiative comes to reality Namibia would be able to produce its own power locally and not depend on other countries.

According to research, the Ministry has also managed to endeavours rural electrification project using grid and off grid technologies for sustainability.

The industry has further made history with the first ever production of iron ore in Namibia to be used locally with the aim of underpinning the much desired upstream value addition and conserving foreign exchange with reduction of importation inputs such as cement.

Statistics provided by the National Statistics Agency (NSA) late 2015, shows that the mining sector made a direct contribution of 11.9% to Namibia’s GDP, however, contracted by 0.1% in real terms.

In addition, the Chamber statistics also shows that, non-diamond mining surpassed diamond mining as the larger contributor to revenue and foreign exchange earnings while the figure for non-diamond mining includes revenues from zinc refining and copper smelting.

Total revenue by non-diamond mining was N$13.82 billion and diamond mining earned N$11.46 billion, which leaves N$25, 28 billion from Namibia’s mining operations for 2015.

The revenue from Namibia’s mining operations was N$25.28 billion while security of supply of petroleum products is of vital significance to the smooth flow growth of the national economy for a nonproducing country such as ours.

The Ministry also managed to start with the construction of the national strategic fuel storage tank farm for 2016/17.

Namibian sector continued to perform comparatively well despite the various global headwinds experienced in 2015 meanwhile, other countries such as China’s cooling economy were mining companies worldwide were forced to cut their costs, while many were left with little choice but to retrench staff and suspend operations.

According to a statement released by the Mining Industry Association of Southern Africa (MIASA) 70 000 jobs were lost in the mining sector across the region ever since the down turn of commodity prices.

Although Namibia was not left unaffected, we can find ourselves in a unique position where the mining sector is beginning to reap the fruits of preceding investments.

Further, in 2015, mining and exploration companies collectively employed up to 8.853 people in permanent positions. Total employment sector includes permanent, temporary positions as well as contractors, increased from 17,770 in 2014 to some 19,000 jobs in 2015 and still expected to increase in 2016.

In conclusion, the industry has created more jobs than it has lost in the last 3 years and continued to create new opportunities for value addition with new copper cathode production which has commerce for the first in the history of Namibia.
The mining industry has definitely demonstrated resilience against the current global downturn as Namibia is the only African country where the industry is on the growth path.