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Namibia Mining Report Q3 2009
Business Monitor International, July 2009, Pages: 55
The Namibia Mining Report provides industry professionals and strategists, corporate analysts, mining associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Namibia's mining industry
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 under-performing 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.
The global economic slowdown continues to impact on Namibia’s mining sector. A June report on PANA stated that Weatherly International, owner of major copper producer Ongopolo Mining, would not be reopening its five copper mines in 2009, despite a recent increase in global copper prices. Weatherly’s mining operations were suspended in 2008, with more than 620 people losing their jobs as a consequence. Looking forward, reports that Weatherly has been auctioning off underground mining equipment do not bode well for the near-term future for their Namibian operations. That said, Managing Director Hans Nolte has defended the move to sell off underground mining equipment, telling PANA that his company may look to abandon underground mining in favour of cheaper open-pit mining. However, while job losses are increasing in the copper and diamond sectors, many workers are moving over to the burgeoning uranium sub-sector, which is continuing to power ahead. New mining charter
In May 2009, there were fresh media reports that Namibia is thinking of following the lead of South Africa and introducing a mining charter, designed to increase black ownership of mineral assets. South Africa’s legislation, introduced in 2004, compelled mining companies to sell a 15% stake in mining assets to local black investors by 2009, rising to 26% by 2014. However, certain critics of the South African approach say it has only benefited a small number of politically-connected black businessmen and can actually act as a deterrent to foreign investors. With this in mind, we will wait and see how the new legislation compares to that enacted in South Africa.
At the same time, the Namibian government also intends to establish a state-run mining exploration company, Epangelo Mining, to compete with private players in the exploration sector.
Global overview
The analyst examines the phenomenon of increased Chinese activity in the global mining sector and what this means for the industry moving forward.
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 the reports forecasts, the mining industry of Namibia is estimated to reach a value of around US$1.24bn by 2013.
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