Mining sector records consecutive profit

THE mining industry recorded a profit of N$928,4 million for a second consecutive year, riding on higher mineral commodity prices.

This was said by Chamber of Mines president Hilifa Mbako when he made a presentation at the chamber’s virtual annual general meeting, which was also attended by mines and energy minister Tom Alweendo on Wednesday afternoon.

“The profitability of the sector fell by 16,8% in 2021, due to increasing input costs,” he said.

Mbako said although the sector had benefited from higher commodity prices, it had registered a reduction of 4,6% in total revenue, primarily due to the winding down of operations at Weatherly’s Tschudi mine in 2021.

“As a result, total revenue paid by chamber members to the government in 2021 decreased by 17,43% because of lower sales and profits compared to 2020,” said Mbako.

He said because of lower profits recorded, corporate taxes paid by the mining industry fell from N$2.2027 billion in 2020 to N$1.553 billion in 2021, and chamber members paid N$1.611 billion in royalties and N$231,7 million in export levies, which fell by 3,65% and 0,57% in 2021, respectively.

“The drop in royalties was a result of the royalty remission from 10% to 5% to Namdeb operations,” Mbako noted.

He said the various expansion and exploration activities by mining companies had resulted in a 4,5% increase in direct employment in 2021.

“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 had created 106 722 jobs, which is a sizeable portion of Namibia’s workforce,” he said.

Every job created in the industry also generates an important revenue stream for the government through Pay As You Earn and value added tax as a consumption tax, he said, adding that in 2021, employees in the mining industry paid N$1.086 billion in PAYE.

“About 96% of workers in the mining sector in 2021 are Namibians, meaning that the wage bill of N$5.945 billion circulated within Namibia, creating local spin-offs that support and benefit other sectors of the economy.”

Mbako said the mining sector continued supporting local suppliers and spent approximately N$15.297 billion on goods and services from Namibian businesses.

“This is equivalent to 47% of total revenue from mining in 2021 and as a proportion of total procurement spend by the sector, the local spend amounts to 59%,” he said.

Mbako added that exploration expenditure incurred by the chamber’s members increased by 57,5%, from N$264,5 million in 2020 to N$416,7 million in 2021.

Giving the industry’s highlights, Mbako said Namibia exported 52 000 tonnes of iron ore fines, produced at the Lodestone Namibia project at Dordabis, through the port of Walvis Bay, making the country a net exporter of iron ore for the first time in history.

“Trigon commissioned the old Kombat mine and produced its first copper concentrate in December 2021. It is revamping to produce 14 000 tonnes of concentrates per annum and has already made its first shipment in 2022,”

According to Mbako, the inauguration of Debmarine’s Benguela Gem vessel, whose lifespan is 30 years, will significantly contribute to marine diamond mining operations by increasing production by 500 000 carats per annum.

“In October 2021, Namdeb also announced the extension of the life of land-based operations from 2022 to 2042, after negotiations with the government which has granted a royalty remission of 5% from 10% from 2021 to 2025.”

Mbako said diamond production in the country increased by 5% from 1 447 376 carats in 2020, to1 527 525 last year as a result of increased production from Debmarine’s offshore operations and Namdeb’s land-based operations.

“Production from Samicor Diamond Mining fell by 9% in 2021, arising from Covid-19-related challenges and vessel crew delays,” Mbako noted.

The Rössing Uranium Mine registered a 15,7% increase in output due to operational improvements in the processing plant, while lead concentrate production from the Trevali Rosh Pinah Mine increased by 13,61% and zinc concentrate fell by 8,49%.

Mbako said gold production from B2Gold’s Otjikoto mine rose by 18% in 2021, due to significantly higher output levels in the second half of the year.

“Output from the Navachab Gold Mine increased by 1% as mining was ramped up to a larger mill capacity, although operations were negatively impacted by Covid-19-related delays in the delivery of their new equipment,” said Mbako.

Mbako said the chamber welcomed as positive the High Court ruling on 30 June 2021, that Namibia’s marine phosphate’s mining licence was valid, as this would ensure the development of marine phosphate mining in Namibia.

He highlighted that mining operations were allowed to continue as normal during Covid-19 restrictions and lockdown, but the industry was not spared from the devastating loss of life and severe illness during the third and fourth waves of the pandemic.

The winners of the Inter-Mines Safety competition were announced during the AGM, with Dundee Precious Metals Tsumeb scooping the Division A and Sperrgebiet Diamond Mining winning Division B.

The development/exploration projects division was won by Reptile Mineral Resources and Exploration (Pty) Ltd, while Namib Lead and Zinc Mining (Pty) Ltd took the care and maintenance accolade.

The chamber retained the members of the executive committee from 2022 to serve in 2023 with Mbako, the president, Irvinne Simataa, first vice president and Zebra Kasete, the second vice president.

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