Namibia is blessed with abundant natural resources and a relatively small population, compared to countries even half its size. The country’s vast mineral resources include diamonds, uranium, copper, gold, lead, tin, lithium, cadmium, zinc, salt and vanadium – and as such, mining contributes up to 25% of Namibia’s income and remains the largest contributor to the GDP.
Total revenue by non-diamond mining in recent years was over N$13 billion, and diamond mining regularly earns more than N$11 billion a year. Namibia produces approximately 2% of the world’s gem-quality diamonds.
Five major companies account for the majority (95%) of domestic mining income, with diamond and uranium mining being by far the two most developed industries.
However, gone are the days when global mining houses can pay a minimal fee to extract our valuable resources only to process them elsewhere. These minerals must be processed locally because it is only through local beneficiation that the domestic economy will contribute to real economic growth, real employment creation and real industrialisation.
Local value addition is imperative to increase the number of direct and indirect mining jobs to meaningfully help grow the small Namibian economy. Beneficiation is the only viable tactic for the capital-intensive and yet lucrative mining industry to contribute its fair share to Namibia’s development.
To give global mining houses credit, they do spend millions of dollars on training and skills development for Namibians. This is on top of the hundreds of artisans qualified each year by entities such as The Namibian Institute of Mining and Technology (NIMT). But more can be done to impart highly technical skills to grow Namibia’s beneficiation activities. This approach has been emphasised by the trade ministry’s mineral beneficiation strategy that seeks to create an environment conducive to investment and value-addition.
If implemented successfully, this value-addition strategy holds enormous potential to grow and develop the country.
In addition, an effective beneficiation sector can considerably cushion blows when, for instance, a large mine closes down for whatever reason. This is because value-addition activities can then absorb much of the labour of existing mining activities.
The recent Xinfeng debacle is a perfect example of how not to operate in the extractive industry. The entire fiasco just shows that we, as Namibians, need to take ownership of our resources, specifically the management of these valuable reserves.
It had come to light that Xinfeng has been exporting huge amounts of Lithium to China on the premise that its Namibian processing facility is not ready. However, as Namibia’s lithium revenues could exceed all other commodities combined, it is vital that authorities insist on processing facilities being developed in tandem with mineral extraction activities.
It is estimated that the value of the local lithium industry could be as high as US$770 million (6.7% of GDP) with total taxes paid to government projected at US$240.1 million and royalties of US$34.3 million in the extreme case.
If processed locally, then lithium alone could drastically increase these figures, which in turn could greatly benefit the Namibian economy and its people.