Driving Inclusivity in Namibia’s Mining Sector

Mining in Namibia has been a key sector before and after Covid-19, contributing about 13.3% of gross domestic product (GDP) in 2024 – an indicator of the sector’s resilience.

While Namibia is a regional outperformer in terms of its openness to international trade, the formal economy relies heavily on mining and intensive agriculture.

Declining diamond and uranium exports and rising imports of consumer goods will weigh on Namibia’s trade balance over the short term.

While Namibia has historically relied on South Africa for trade, mainland China has become the market’s main export partner in recent years.

Given the Namibian economy’s reliance on mining and its policy aspirations to build a more ‘Namibianised’ mining sector, the N$939.5 million that is allocated in the 2025/26 financial year to the Ministry of Industries, Mines and Energy can potentially fall short of achieving these aspirations given the limited domestic resource mobilisation in the sector.

Namibia’s diamond, gold, and uranium each contributed 5%, 3.6%, and 2%, respectively, of the world output.

In 2023, Namibia ranked as the third-largest global producer of uranium, with 6 380 tonnes of uranium.

This boost was catapulted by the expansion of the world-scale Husab Mine as well as the restart of production at Langer Heinrich, and successful exploration activities mean that Namibia will continue to emerge as a major player in the global uranium market over the coming years.

Another key, the discovery of copper, cobalt, and lithium deposits, may herald considerable investment into the mining sector beyond diamonds and uranium.

Among precious metals, gold continues to perform strongly, reaching new record prices due to increased demand from investors and central banks seeking a safe place to protect their money.

Namibia has substantial unexploited diamond and uranium deposits, and production is expected to grow as high-profile projects come online over our long-term forecast period.

The restart of copper production and applications to begin lithium mining indicate that Namibia’s extractive sector may diversify further over the coming years.

Namibia will remain one of the more attractive investment destinations in Africa due to its solid infrastructure, openness to trade, and strong legal framework.

BEYOND ORE

Given Namibia’s policy aspirations for the mining sector, corporate finance investment alone will not meet these aspirations.

A combination of development funding (patient capital) and corporate and government funding will be needed to achieve the desired outcomes of a more Namibianised and industrialised mining sector.

We need to be both astute and creative to actively raise capital and increase Namibia’s participation in the sector, bearing in mind the need to fortify sector sustainability to survive the future headwind, while contributing to Namibia’s GDP without over-exploiting the resource.

After all, it would be uneconomical to exploit a resource, a costly exercise, without putting good measures in place that ensure sustainability and benefit all.

Some of these headwinds in mining come from its cyclical nature, anchored by commodity prices and fluctuations in global demand, as well as external shocks such as conflicts, tariffs, and lab-grown diamonds.

Given the narrow structure of the Namibian economy, this should be worrisome, as the dependency level on taxes, royalties, and dividend collection serves as life support to the government’s fiscal account.

This requires that more domestic opportunities be created for direct investments in the mining sector across its value chains, inclusive of value addition at different levels.

A case can be made for Namibia to fully realise its potential in terms of growth and inclusivity through mining activities; a paradigm shift is needed from being an extractive resource economy to becoming a fully fledged mining, processing, and value-added economy.

A mining sector that has value-chain activities is not only creating job opportunities for our engineers, geologists, and artisans but also greatly supports the entrance, growth, and scale of Namibian small and medium enterprises.

In fact, micro-businesses (the informal sector) could have a direct benefit, for example, providing support to small miners in the Kunene region in the form of processing units and access to markets.

In a nutshell, increasing local entrepreneurial participation in the mining value chain, particularly in technical and technological services, is essential.

All great things are only achieved through a grand strategy, the right mindset, and the commitment to start by doing.

• Jason Kasuto – Managing Partner at Monasa Advisory and Associates.