..as mining sector employees increase to over 16000
Government earned approximately N$2.6 billion from employees from mining companies in 2022 through PAYE, outgoing President of the Chamber of Mines of Namibia, Hilifa Mbako revealed in an industry address last week.
The majority of individuals employed by the mining sector are Namibians, who consisted of approximately 97% of the mining workforce in 2022, Mbako affirmed.
“This means that the wage bill of N$6.225 billion circulated within Namibia’s borders and creates local spin-offs that support and benefit other sectors of the economy,” Mbako further explained.
Total direct employment increased by 6.9% in 2022 and the sector collectively employed 16,147 people.
“The increase was a result of the new employment positions created on Debmarine Namibia’s new mining vessel and increased exploration activities, which contributed to a higher number of contractors employed,” Mbako said.
The direct employment consisted of 8,391 permanent employees, 742 temporary employees and 7,014 contractors.
“Every job created by the industry also generates important sources of revenue for Government through PAYE and VAT as a consumption tax.”
Meanwhile, total revenue to government paid by Chamber members increased by 27% in 2022, owing to higher corporate tax rates, royalties and export levies received. These increased by 29%, 34% and 8% respectively. The higher royalties and export levies were due to the higher sales values, while corporate taxes were boosted by substantial profits by individual operations, particularly for diamond mining.
Mining’s Contribution to the Namibian Economy
The mining sector recorded another year of strong growth in 2022 of 21.6%, compared to 11% in 2021. The industry also significantly increased its relative importance to the Namibian economy by growing its share of GDP from 9.2% in 2021 to 12.2% in 2022.
Mbako noted that the improved performance was underpinned by increased diamond production, which grew by 44.2% in 2022.
“This increase was mainly a result of the additional output from Debmarine Namibia’s new marine diamond vessel, the Benguela Gem. The combined uranium output (from Rӧssing and Husab mine) fell by 2.5% due to continued water supply disruptions. Gold production from B2Gold’s Otjikoto mine fell by 18.2% owing to development delays of the underground mining operations at the mine. Production from the Navachab gold mine increased by 61% in 2022.
“This is the second highest production achieved in the history of the operation, and was a result of higher volumes mined and the successful commissioning of the leach expansion that improved gold recovery,” Mbako said.
Year-on-year, zinc concentrate output dropped by 4% in 2022 and lead concentrate increased by 31%. Despite the lower production for zinc concentrate, RPZC mined a record of 74 million pounds of zinc, against a budget of 64.2 million pounds.
Andrada Mining’s Uis mine increased tin concentrate production by 9% due to the completion of the phase 1 plant expansion. Combined coarse salt production from Walvis Bay Salt & Chemicals and the Salt Company increased by 10.3% in 2022.
“The higher output was a result of the improved recovery rates from the Walvis Bay Salt & Chemicals operation,” remarked Mbako.
The export values of Namibian minerals registered significant increases in 2022 in nominal terms. The higher revenue was supported by the higher Namibian dollar prices received for the export of minerals due to a weaker overall exchange rate in 2022. This also contributed to increased foreign exchange earnings.
“Despite the apparent improvement in overall sales values, the sector’s financial performance in terms of profitability declined by 142% in nominal terms. It appears that the cost pressures from mounting local and imported inflation far outweighed revenue gains from a weaker exchange rate,” Mbako said further.
According to the Namibia Statistics Agency (NSA), fixed investment by the sector fell by 29% in 2022 as many of the expansion projects by mining operations were completed in the 2021 – 2022 period. These were the construction of Debmarine’s new vessel, B2Gold’s underground mine development and Navachab’s expansion activities. The temporary suspension of the RP 2.0 expansion project of the Rosh Pinah Zinc mine also contributed to the decline in fixed investment.
Investment into exploration continued with its upward trajectory, breaching N$1.3 billion in real terms (an increase of 12%). The main drivers of the increased expenditure were the progressive exploration activities at Andrada Mining’s Uis tin mine, fast-tracking of the Osino Resources Twin Hills project, the advancement of uranium projects, and the rush for critical minerals in Namibia.
“I would like to highlight that in a world which is ever changing, so the industry is also moving with new trends and global transitions. This means a dynamic policy and legislative landscape is necessary, and as the Chamber, we will continue to position ourselves so we can respond accordingly with a vision to advance the long-term growth of Namibia’s mining sector.
“By adopting a more holistic approach on addressing policy matters, this has shifted the nature of engagement with key public sector stakeholders and we firmly believe this will set the scene for the attainment of win-win outcomes. Policy dialogues and public engagements have indeed sometimes been contentious, but I believe we have made great progress on a number of fronts,” concluded Mbako.