Attractiveness as mining jurisdiction collapses

Research on the mining industry has revealed less than encouraging results for Namibia in terms of political attractiveness as a mining jurisdiction.

Namibia Chamber of Mines Chairman Hilifa Mbako said this should sound a clear warning to the government that much more needs to be done to renew investor confidence in Namibia as a stable and attractive mining jurisdiction.

Mbako said so during the chamber’s annual general meeting, held virtually on Wednesday.

In his review for 2021, he said the sector had started enjoying the fruits of an improving commodity price environment in 2021 – right in the middle of the pandemic.

Looking ahead, Mbako said, “There is a lot of optimism for mining in Namibia and the local economic outlook both points to two positive years of growth for mining in an environment of rebounding commodity prices. first”.

Total capital investment reported by chamber members recorded a further 15.3% increase in gross fixed capital formation in 2021, totaling N$5.592 billion. The investment was driven by the construction of Debmarine’s new mining vessel, the Benguela Gem, as well as expansion plans at the Otjikoto Gold Mine, Rosh Pinah Mine and Navachab.

“The mining sector has collectively invested N$14.1 billion over the past three years, a sure indication that the industry is also a major source and contributor of direct investment to Namibia, as other sectors have recorded declining levels in recent years,” the president said. .

According to Mbako, the chamber is confident that the mining sector is well placed to support Namibia’s much-needed economic recovery over the next two years instead of rising mineral commodity prices and higher production of diamonds and gold. uranium.

He noted that this view is supported by the strong growth rate of the mining sector in 2021, which recorded 13.6%.

The growth is attributed to an increase in diamond and uranium production and a moderate increase in gold production.

The uranium and diamond subsector recorded growth of 2.5% and 25.8%, respectively, in 2021.

Mining also remained the main anchor sector of the economy and the largest contributor to gross domestic product (GDP), which stood at 9.1% in 2021.

Meanwhile, total revenue paid to government by chamber members fell 17.43% in 2021 due to lower revenue from sales and profits earned, compared to corporate taxes paid by the industry in 2020, which fell from N$2.2027 billion in 2020 to N$1.553 billion in 2020. 2021 due to lower recorded profits.

Mbako said members of the chamber collectively paid N$1.611 billion in royalties and N$231.7 million in export taxes, which fell by 3.65% and 0.57% in 2021, respectively.

Regarding job creation, he said that the sector collectively employed 15,246 people for the period under review. “Direct employment consisted of 8,640 permanent employees, 1,103 temporary employees and 5,503 contractors. Applying a conservative mining multiplier of seven, the mining industry created 106,722 jobs, which represents a significant share of the Namibian workforce,” the chamber speaker said.

In addition, the mining sector spent approximately N$15.297 billion on goods and services from companies registered in Namibia.

At the same time, Mines Minister Tom Alweendo said the sector continued to be important, but collaboration between the regulator, government and industry was key to unlocking many other opportunities.

“Efforts to improve the attractiveness of the sector consist in making it more transparent. I am also more concerned about how Namibians are not involved in the mining sector,” Alweendo said.

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2022-04-29 Maihapa Ndjavera

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