Unlocking the mining industry’s potential
14 July 2021 | Opinion
Namibia is a renowned and significant mining jurisdiction – home, amongst others, to some of the world’s largest uranium deposits and is the world’s largest producer of marine diamonds. As such, the mining and exploration industry is a key driver of economic growth as it contributes approximately 10% to the country’s Gross Domestic Product (GDP).
The mining industry has long found its strategic partner in RMB Namibia, which through its membership of the FirstRand Namibia group, is affiliated to one of the largest financial institutions in Africa.
RMB Corporate Investment Banking has been in existence in Namibia since 2014, currently partnering approximately 80% of the active players in the Namibian mining industry. Through offering innovative corporate banking and financial solutions to clients in Namibia for more than a decade, RMB Namibia remains committed to seeing and helping our clients and stakeholders through the present challenges.
As partners and not as mere service providers, RMB Namibia’s dedicated team continuously develops tailormade solutions to meet the ever-evolving funding requirements of clients.
How we do this consistently is in ensuring that we have harnessed the internal capabilities of our team, including experience and technical expertise, and the ability to form strong partnerships with our clients and offer them unique and specific solutions to their requirements.
Due to the pandemic and resulting restrictions, mining’s contribution to Namibia’s GDP contracted by about 12% over the past year. Although mining was classified as a critical activity and some operations were allowed to continue at minimal levels, other operations went into care and maintenance.
However, because Namibia in general has a diverse mix of mining operations, including base metals, precious metals, and uranium, overall, the impact of Covid-19 was well-buffered by the mere nature of the diversified mining portfolio of the country.
At the same time, there are ongoing efforts to develop local beneficiation. For example, in the diamond industry there has been an enormous drive to promote the local cutting and polishing industry. Today, 15% of the diamond production in Namibia gets handled by a local Namibian company. Although still at feasibility stage, there are plans to increase the quantity of locally refined zinc with the possible conversion of a zinc refinery plant in Namibia.
Moreover, there are currently several projects at various stages to supply the increasing demand for minerals feeding into the battery and electrification sector. The mining industry has always been at the forefront of the transition to a green economy, and the Namibian mining industry adheres to strict environmental regulations thereby complying well with the various ESG facets – Environmental, Social and (Corporate) Governance tenets.
From an ESG perspective, there are no drastic behavioural or structural changes that have taken place or that need to take place currently. Highlighting ESG commitments in the industry today is more about being able to reposition (from a reporting point of view) what is already being done towards a greener economy.
With regard to energy, Namibia remains a nett importer of power, but there are many renewable energy projects, either in construction or in the feasibility phase, presently working on ensuring long term access to power for ongoing mining operations. In addition, the country’s geographical location makes it the perfect candidate for both solar and wind opportunities, which continue to be considered.
Despite the potential that the sector holds, there remains room for improvement in how exploration licenses are allocated. Currently, there is a complete moratorium on issuing new licenses within Namibia, which will only be removed later in August this year. Put in place because the Ministry of Mines and Energy saw a need for improvement in the licensing process, this moratorium allows for the development of new policy and regulatory frameworks, forged on amongst others, clear sustainability guidelines.
We trust that by the end of 2021, we will have a positive policy outcome and thus a more conducive and enhanced environment for continued growth of the sector.
The availability and quality of geological and geophysical data could also improve in terms of broader access to this information. Currently, the Geological Survey of Namibia hosts and owns the geological data sets. Making this information more accessible to the public will certainly encourage exploration investment.
Most investors consider Namibia an excellent mining jurisdiction, but there remains a lack of required technical skills in the sector, which, which if adequately addressed, adds to investor appetite. At the same time, more needs to be done to transfer skills to Namibian citizens.
These and other aspects relevant to Namibia’s growth potential are continuously on our mind, and we are committed to actively engaging all stakeholders in the mining industry to ensure its full potential is unlocked.
*Fabian Shaanika is RMB’s Sector Lead: Mining and Natural Resources