Mining Industry Performance in 2015

Mining & the Economy

Namibia’s mining sector continued to perform comparatively well despite the various global headwinds experienced in 2015. In the wake of China’s cooling economy, mining companies world-wide were forced to cut costs, while many were left with little choice but to retrench staff and suspend operations. According to a statement released by the Mining Industry Association of Southern Africa (MIASA), some 70,000 jobs were lost in the mining sector across the region since the down-turn of commodity prices. Although not left unaffected, Namibia finds itself in a unique position in which the mining sector is beginning to reap the fruits of prior investments. 

Declining Commodity Prices

Over the last three decades, the world economy has been driven by Chinese growth. However, as the Chinese economy shifts from an export led growth model to one of domestic consumption, growth has gradually tapered off from 2010. While the country’s current growth rate of 6.8% still far outpaces that of other developed economies (i.e. US and the Euro Zone), as demand from China declines so does their appetite for commodities, both domestically and internationally. A combination of global over supply and a further slowdown in China’s economy continues to reinforce market weakness and push prices down.

Exchange Rate Depreciation

In addition to low commodity prices, severe capital outflows from emerging market countries caused a depreciation in the respective economies and a U.S dollar appreciation. The capital flight was a direct result of the expected hiking of the U.S Federal Reserve rate. The rand also took a severe knock in 2015, falling below historic thresholds in December, and was further worsened by a shrinking economy and an unstable political and social climate. As a result of the Namibian dollar-rand link, these turn of events had a direct impact on the Namibian economy.

Gross Domestic Product

Given the global economic climate, the Namibian mining sector performed relatively well in comparison to its neighbouring countries. Statistics produced by the Namibia Statistics Agency (NSA) show that the mining sector made a direct contribution of 12.5% to GDP in 2015, a slight drop from 12.8% in 2014. In real terms, the mining industry contracted by 0.3% in 2015 compared to 6.2% in 2014. The moderate contraction of the sector was due to the counteraction of negative and positive spin offs in the Namibian mining sector. It must be noted that this statistic excludes output from zinc refining and copper smelting activities, which would greatly add to the real contribution made by the Namibian mining sector.

Diamond mining output contracted by 6% in 2015 from 2014 as a result of operational challenges and declining diamond prices. The Diamond sub-sector, however, remained the largest contributor to mining output in 2015. Production of refined zinc, copper, lead and zinc concentrate also declined in 2015 as a result of depressed market forces, leading to reduced sales and revenue generation from these minerals.

Chamber statistics revealed that the Revenue generated by the mining sector grew from N$22.78 billion in 2014 to N$25.28 billion in 2015 in nominal terms. As mentioned above, lower output and escalating input costs saw real foreign exchange earnings by some operations fall. However, the net effect remained positive as a result of increased gold and copper cathode output as the B2Gold’s Otjikoto gold mine and Weatherly’s Tschudi mine came on stream and successfully ramped up to full production. A  low oil and gas price and exchange rate provided some relief to mining operations, as it translated to reduced fuel related input costs and higher local currency earnings respectively.

The Chamber remains confident that the industry will continue to grow in the medium term, with a forecasted GDP contribution of 17% by 2018 as Swakop Uranium’s colossal Husab mine is yet to come on stream. New developments on the horizon, such as the North River Resources Namibia Namib Lead and Zinc project and Namibia Rare Earths Lofdal project as well as reinvestments by the sector are also expected to contribute to industry growth in the near future.

Fixed Investment 

2015 saw a significant decline in fixed investment made by the sector of 68%, from N$17.26 billion in 2014 to N$5.48 billion. The 2015, however excludes the figure from Swakop Uranium. We thus expect the real fixed investment figure to be much higher. The decline was largely as a result of the ramping up of fixed capital formation as the Otjikoto, Tschudi and Husab mines transitioned from development phases to production and operation.

Similarly, statistics generated by the Chamber of Mines also show a drop in exploration expenditure from N$625 million in 2014 to N$490 million in 2015. Exploration expenditure has gradually reduced in the last three years primarily as a result of depressed commodity markets and also as projects move from development into the production phase.


At the end of 2015, Chamber members directly employed 8,853 permanent employees, 716 temporary employees, and 9,243 contractors. Employment creation by the mining sector has been exceptionally high over the last three years due to the construction of three new mines.


In 2015/14 the Ministry of Finance (MoF) received profits taxes from the mining industry totalling N$1.979 billion from diamond mining and N$94.2 million from other mining. Diamond royalty tax contributed N$1.043 billion and royalties from other minerals provided N$199.5 million to government revenue. The total revenue received from mining in 2014/15 amounted to N$4.019 billion, which includes dividends, a significant increase from the N$1.951 billion collected in the previous financial year.

According to statistics produced by the Chamber of Mines, in 2015 the mining industry paid out a total of N$3.76 billion in corporate taxes and royalties, an 11% increase from the 2014 total of N$3.39. Notwithstanding the economic challenges faced by mining companies world-wide, the Namibian mining sector continued to contribute significantly to Government coffers as investments were realised.