Tough commodities year for Nam

Namibia’s gain from the recent surge in commodity prices was offset by the strengthening of the exchange rate which led to low export volumes.

24 December 2021 | Business

Staff reporter – Healthier global appetite boosted commodity prices in the first 10 months of 2021, but a stronger Namibia dollar hampered the country to fully reap the advantage of the international recovery.

The local currency strengthen by 12.7% to N$14.60 against the greenback during the period, negatively affecting exports receipts and volumes of all Namibia’s commodity exports, particularly uranium and gold, the Bank of Namibia (BoN) said in its latest Quarterly Bulletin.

Namibia’s only two uranium mines currently in operation, Rössing Uranium and Husab, continued to benefit from contractual prices that remained above the prevailing spot prices, the central bank said. For the year till end-October, the average international uranium spot price increased by 12% to US$33.56 per pound.

However, the BoN said, the spot price was significantly below the subsidised average contract prices that the two local mines are getting from the foreign shareholders.

“Uranium production is not low cost and the average operating costs at the uranium mines has also exceeded the spot price in recent years. Thus, the differential between the spot and contract prices has largely allowed the currently operating mines to break even and has not been associated with profitability,” it added.

According to the BoN, this has been a key factor behind some of the mines – Langer Heinrich, Trekkopje, Etango and Valencia - remaining under care and maintenance.

The bank added: “Furthermore, most of the domestic uranium production is sold to China due to the vertical integration of local mines in the structures of the parent companies that have nuclear reactors. China’s demand for uranium is strategic in nature and mainly focuses on security of supply.”


Looking ten years ahead from October 2021, the long-term uranium prices have increased to around US$43.00 per pound, the BoN said. However, this is still not enough for the mines that are currently under care and maintenance to return to operation.

“While long-term uranium prices closely mirrored the developments in the spot prices in the past, uranium prices are expected to trend upwards as energy firms are set to phase down coal usage. In addition, China plans to build up to 150 new nuclear reactors over the next 15 years, while Japan plans to put 30 reactors back to activity to meet emission goals,” the BoN said.

However, the central bank pointed out, the four mines mentioned above will remain under care and maintenance until the uranium price recovers to any price above US$55 per pound as they are very sensitive to changes in prices due to their low-grade ore.


The diamond industry was severely impacted by the Covid-19 pandemic during 2020 but has recovered throughout 2021.

“De Beers International continues to report a recovery in demand for rough diamonds as well as prices on the back of a recovery in demand from key markets such as China and the United States,” the BoN said.

The average implicit prices for Namibia’s diamonds rose by 23.5% to US$418 per carat during the first ten months of 2021 relative to the same period last year.

The BoN said the holiday season celebrations as well as the Chinese New Year is expected to support the recovery in diamond demand going into the last months of 2021 as well as the first quarter of 2022.

“Namibia is expected to benefit from higher prices as production is expected to recover on the back of the new diamond recovery vessel which is expected to add an additional 500 000 carats to the annual output going forward,” it said.


Gold prices began to rise during the first quarter of 2020, with the highest price since 2009 recorded during the third quarter of 2020. Fold prices rose by 2.7% to US$1 789 per fine ounce during the first 10 months of 2021 relative to the same period last year.

“Namibian gold mines benefited from the surge in gold prices as the prices closely tracked the international gold prices,” the BoN said.

“It is worth noting that the surge in gold prices have stabilised and have begun to fall since the record highs observed during third quarter of 2020. This was as result of lower demand for gold as a safe haven coupled with the appreciation of the US dollar since the third quarter of 2020,” it added.

“Going forward, changes in international gold prices are subject to the global vaccination rate as well as the potential benefit from the negative impact that the Omicron variant might have on the global economy and the associated uncertainty,” the BoN said.


Zinc prices recovered in the first ten months of 2021 from their lows in 2020, supported by the weaker US dollar, and huge fiscal stimulus in advanced economies, according to the BoN.

The BoN pointed out that the implicit prices of the locally produced zinc are much lower than international prices. This could be attributable to the fact that the international spot prices are likely to be for refined zinc while Namibia exports zinc concentrates, it elaborated.

Supplemented by recovery in Peru and Bolivia, and supply increase expected in 2022 from Brazil, China, India, Kazakhstan and Mexico, global supply of zinc will increase in 2022, it said.

“The World Bank is projecting that the average spot price for zinc will fall to US$2 400 per metric ton in 2022, down from the estimated US$2 700/t at the end of 2021,” according to the BoN.

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