Namibia Mining Report Q1 2009

Namibia is richly endowed with natural resources and is known globally for its uranium and diamond deposits. The country is the world’s sixth-largest producer of uranium and among the largest gem-quality diamond producers in value terms. It also features among the top five nations around the globe for its zinc, copper and lead reserves. To expand the revenue earning potential of its mining industry, the Namibian government is making fervent efforts to establish a strong domestic market for diamond cutting and polishing. Taken together, these factors underscore the importance of the Namibian mining industry for its economy.

That said, the Namibian mining industry needs to gain a foothold in certain areas to further enhance its prospects, particularly as diamond production appears to slow down. Lack of water resources is a key factor that discourages investments in the mining industry. As a result of the nation’s underperforming infrastructural facilities, mineral exploration has been slow, thus constraining the growth of the Namibian mining industry. On the other hand, recognising the vital role uranium is set to play in the country’s future, processes have been initiated to revise and amend the Minerals Act, to align regulations that allow judicious exploitation of the resource.

Also, the global economic slowdown began to impact on Namibia’s mining sector in Q109. Weatherly International, owner of major copper producer Ongopolo Mining, announced that it would close down its Tsumeb West and Matchless mines, later confirming that its Otjihase and Tchudi mines would be placed on care and maintenance. Bonaparte Diamond Mines said that it had concluded a diamond exploration project to focus on phosphate finds.

Industry Forecast The global financial crisis and the slump in commodity prices is negatively impacting the Namibian Mining sector. But while the slowdown was felt by diamond miners as the price of the mineral plummeted, the growing importance of the uranium sector has been underlined. In January 2009, Extract Resources and its major stakeholder Kalahari Minerals, confirmed a major resource find of 108mn pounds of uranium oxide at its Rössing South project. Also, Rio Tinto’s subsidiary Rössing Uranium announced that it was on track to produce 4,000 tonnes of uranium at its mine in 2008 and was hoping to increase output to 5,500 tonnes by 2012.

According to BMI forecasts, the mining industry of Namibia is expected to grow at an annual rate of 6.59% over 2008-2013 in local currency terms. .The industry is estimated to reach a value of around US$1.17bn by 2013, contributing over 10.1% to the nation’s GDP.