Namibia’s mining sector profitability declined by 142% last year owing to cost pressures from mounting local and imported inflation which far outweighed revenue gains from a weaker exchange rate, an official has said.
According to the outgoing Chamber of Mines President, Hilifa Mbako, the current supply of critical minerals is not sufficient to meet projected massive increases in future demands, due to a handful of the rare earth minerals being only available in a few countries.
The Chamber, however, sees this as a niche for Namibia to leverage as prices are likely to be high due to demand.
“The industry profitability was affected despite the value of exports of each mineral classification posting significant increases,” Mbako said.
During the year, metal ores increased by 12%, uranium ore by 8%, diamonds by 73%, copper by 8% and other minerals posted a growth of 33%.
Mineral commodity prices varied with zinc and uranium being the only commodities to post relative gains from 2021 to 2022 of 38.5% and 15.9% respectively, while gold shifted by a mere 0.1%.
“In general, the mining sector recorded another year of strong growth in 2022 of 21.6% compared to 11% in 2021. In the same vein, the industry increased its GDP share contribution from 9.2% in 2021 to 12.2% in 2022,” said Mbako, who stepped down as President on Wednesday during the Chamber’s 44th Annual General Meeting.
He was replaced by Zebra Kasete of Dundee Precious Metals Tsumeb, while QKR MD George Botshiwe was elected as first Vice President and B2Gold country representative John Roos as second Vice President.
The Chamber’s 2022 mining annual review shows that total revenue to the government from mining companies increased by 29.6%, due to good performance in the diamond sector.
“Corporate taxes paid by the industry increased from N$1.55 billion in 2021 to N$1.9 billion, an additional of N$2.15 billion paid in royalties representing a 33.7% growth from the previous year. A further N$249.4 million was paid in export levies, an increase of 7.6%.”
In the same vein, the industry provided 16,147 local jobs, of which 8,391 are permanent, 742 temporary and 7,014 contractors.
“This was a 6.9 increase in employment provision, with a salary bill of N$6.22 billion. While every job created resulted in N$2.6 billion pay as you earn tax paid to the government. Furthermore, N$16.82 billion was spent by mining companies in supporting locals through procurement of supplies,” stressed Mbako.
