Significant improvements in the mining sector

The mining composite index registered a monthly growth of 9.1% in September 2021, an improvement when compared to a growth of 4.9% in August 2021.

23 November 2021 | Economics

While we remain positive about the mining sector in the short run and long run, economic growth should not rely extensively on the mining sector. Simonis Storm

PHILLEPUS UUSIKU

The local mining industry underwent significant amount of investment last year in order to expand operations, implement care and maintenance and expand their life of mine. As a result, mining production is expected to weigh on growth during 2021 and only provide support to gross domestic product (GDP) growth from 2022 onwards, Simonis Storm stated in their latest quarterly report.

According to the Namibia Statistics Agency (NSA) mining sectoral report, uranium, gold and diamond production registered positive growth in September both on monthly and yearly basis. Meanwhile, Zinc recorded a monthly decline and an increase on an annual basis.

The volume of diamonds produced amounted to 138 396 carats in September 2021, compared to 127 057 carats in August 2021. 36 601 carats were produced in august 2020, NSA pointed out.

In addition, on yearly basis, gold bullion production increased by 79.0%, which is a tremendous improvement when compared to a reduction of 17.4%recorded in the corresponding month of 2020.

The production of gold bullion stood at 852 kg in September 2021 compared to 844 kg and 476 kg registered in August 2021 and in the corresponding month of 2020, respectively. The increase in the production of diamonds carats and gold bullion were due to the global demand and the expansion of operations in the mining activities, NSA said.

Moreover, the uranium production index on a monthly basis registering a growth of 24.1% in September 2021, compared to a growth of 3.9% recorded in the preceding month. On annual basis, the index posted a reduction of 0.4%.

Sufficient water

The increase recorded in the production of uranium on monthly basis was mainly attributed to high-grade ore mined. This was driven by the availability of sufficient water required to mine and process uranium minerals efficiently during the review period.

It is worthwhile to note that in the month of September 2021, the production of uranium jumped to 668 tons compared to 538 tons and 671 tons produced in August 2021 and September 2020, respectively, NSA added.

Lastly, 7 626 tons of zinc were produced in September 2021 compared to 7 783 tons and 6 956 tons produced in August 2021 and September 2020, respectively.

Overall, the mining composite index registered a monthly growth of 9.1% in September 2021, an improvement when compared to a growth of 4.9% recorded in the preceding month. Annually, the index recorded a growth rate of 96.4% for the period under review, NSA said.

According to Simonis Storm, “while we remain positive about the mining sector in the short run and long run, economic growth should not rely extensively on the mining sector. Many argue that the mining sector has reached its full potential. The mining sector is the second biggest employer, employing just over 14 000 workers, but is unlikely to employ more citizens given the capital-intensive nature of the industry. The Namibian economy should diversify its income generating industries and be less raw commodity growth dependent.” [email protected]

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