The mining sector continues to be a key contributor to the Namibian fiscus. The Namibian mining industry contributes annually approximately 9% to GDP and paid N$6 billion in salaries and wages to over 14500 workers. Another N$12 billion went into local procurement, while the Namibian government netted N$4 billion in much needed taxes. With the effects of the pandemic regularizing and commodity prices rising, these figures will go up.
Mining companies continue to enjoy high prices for their products, and with the continued exceptional production performance of key mining houses it should be expected that the sector will continue to show resilience and growth.
The Growth of ESG
Social amelioration continues to be an important consideration for the sector, given the country’s inequality challenges – particular in those remote regions in which mines tend to operate. These developmental challenges have certainly been exacerbated by the effects of the COVID-19 pandemic. Mining companies showed great support in managing the pandemic, not only as it relates to their workforce but also to the broader communities in which they operate.
The mining sector is on a trajectory towards redefining its business model to one that is greener, more sustainable and community oriented. The ever-growing focus on climate change and community well-being means that mining companies will have to redouble efforts to reduce their carbon footprint and continue works to address any social issues.
In the recent past, major mining houses such as Anglo American and B2Gold Corporation have started publishing sustainability reports to society/stakeholders in addition to their annual financial results, evidencing their move away from being purely profit-driven to being a responsible player in the societies that host them.
Energy self-sustainability
The Modified Single Buyer model allows transmission electricity consumers and Independent Power Producers (IPPs) to transact with each other directly for supply of electricity, for up to 30% of their energy requirements. The industry is leading the charge in moving towards renewable and decentralized power – With this, mining companies will be able to ensure security of supply as well as gain control of costs. This will aid in positioning mining houses for long-term, sustainable growth.
Wind and solar as energy sources for production and beneficiation of commodities is gaining traction in many major mining markets, and Namibia is likely to follow suit. This is evidenced by the solar park initiatives at B2Gold’s Otjikoto Mine and Rosh Pinah Zinc Mine, as well as with DebMarine’s ‘green’ diamond mining vessel, the Benguela Gem. Investments into these technologies would have the compounded effect of improved operational efficiencies as well as potential premiums on product for those commodities produced with a lower carbon footprint.
Namibia possesses massive potential for renewable energy resources, and as a result, over the last two years, has been a focal point for the development of green hydrogen for export to the European market. This resource potential, alongside the mining sector’s diverse output, make Namibia an ideal candidate to supplement some of this global demand.
The Energy Transition
The rise of electric vehicles, driven by consumer preferences for more environmentally friendly products, is boosting demand for minerals used in batteries and electric motors. This will have the effect of boosting demand for minerals such as lithium, nickel, copper, tin and cobalt – The Namibian mining sector produces a diverse set of commodities and is well positioned to benefit from this boosted demand.
As the industry positions itself for this shift, it will play an important role in the transition to a more sustainable global economy. Southern Africa will certainly have a massive role to play in the decarbonisation of mining and the global economy, and Namibian mines will no doubt be a key contributor to this.
In addition, the fourth industrial revolution is resulting in technology investments that are improving safety, engineering advances, productivity and efficiencies through automation and digitisation.
In conclusion, mining will remain a pivotal driver to building a resilient economy but it is essential that local miners prepare themselves for what seems to be the future – This will be of benefit not only to the mining companies, but will have positive spin-offs for both the economy and the environment as well.
*Kerikora Kavari is a Relationship Manager looking after the Mining & Metals and Power & Infrastructure sectors for Standard Bank Namibia. He is a mining and resources enthusiast who holds a Bachelor’s Degree in Metallurgical & Minerals’ Processing Engineering, and has held a number of roles in the Corporate & Investment Banking division since joining the bank in 2018.
