It is estimated that Namibia’s inland diamond output will decline sharply in the year 2020 as deposits are exhausted, a situation that is now forcing the government, albeit, slowly to shift its attention to marine exploration and mining.
But with offshore diamond mining expensive to operate and capital intensive, the government seems to be focusing more on uranium mining as the mineral is widely believed to be the future of Namibia mining.
Ministry of Mines and Energy permanent secretary Joseph Iita confirmed recently that the future of Namibia’s mining might lie in the uranium sector as exploration and mining for this mineral had been increasingly active in the country.
According to reports, Namibia is set to become the world’s third largest uranium producer by 2015, as the country boasts of some of the world’s largest uranium deposits.
In the year 2008, the country became the fourth largest producer of this important mineral after Canada, Kazakhstan, and Australia.
Joseph Iita was further quoted as saying, “globally, nuclear fuel demand is set to increase significantly as concerns about climate change and security of energy supplies encourage a revival of nuclear power plants, pushing the demand for uranium upwards. Several years into a price recovery, the market outlook for uranium remains positive”.
With about 30 mining companies involved in uranium mining, prospection or exploration what does all this uranium rush mean to the average Namibian?
If the overall socio-economic impact of the Namibian diamond industry is anything to go by, the upsurge in activity in the Namibian uranium industry is likely to be an economic non-event for the majority of the citizens as no significant economic gains and individual development is to be expected.
Granted, the Namibian diamond industry has been the highest foreign currency earner for the country averaging 40 percent of total export earnings but its overall impact on the economy has not been felt by the majority of the people.
According to a Bureau of African Affairs report released last September, diamonds only contributed 5.8 percent to Namibia’s GDP in the year 2007,whilst the mining sector, including the diamond industry, employed only about 3 percent of the total working population of about 500 000 leaving almost half of the population dependent on subsistence agriculture for its livelihood.
Namdeb, the country’s major player in the diamond industry recently retrenched close to half of its 3 200 workforce due to depressed demand caused by the global economic recession (even though some have since returned to work).
In its 2008-2009 financial-year the company also failed to declare any dividend to the government. What is painful is that India, a country with no single diamond mine to speak of, employs approximately one million people in the diamond cutting and polishing industry.
Former Botswana President, Festus Mogae once said, “For our people, every diamond purchase represents food on the table; better living conditions; better healthcare; potable and safe drinking water; more roads to connect our remote communities; and much more”.
I wonder if ordinary Namibians living in one of the sprouting informal settlements in Windhoek will agree with what Mogae said?
So the question is, if Namibia is not getting full value from its diamond, what can be done to ensure value addition and greater economic benefits from the country’s uranium, which is now considered to be the future of mining?
Can tighter fiscal laws be put in place to enable the country reap better financial rewards from its resources and how can this be done without scaring potential investors?
How can the country achieve equilibrium as it seeks to attract and maintain investment and at the same time making sure that its citizens benefit from their natural resources?
In Botswana, where diamond reserves are also set to decline sharply in 2021, the government has enacted a number of measures to ensure that revenues are used to aid diversification.
For example, a fiscal rule has been adopted, which states that mineral revenues must be used to expand the economies productive base, rather than fund consumption expenditure.
Thanks to this and other initiatives enshrined in successive six-year National Development Plans and the long-term policy Vision 2016, growth in the mining industry is burgeoning.
By establishing a new wholly state-owned enterprise that will take part in the country’s exploration and mining drive, government seems to have realised some of its shortcomings.
Recent media reports quoted mining commissioner, Erasmus Shivolo, saying the government has established a state owned company called Epangelo Mining that will take part in the exploration and mining of Namibia’s precious resources, for the sole purpose of making money for both company and the state.
The company was launched in December 2009 and will not limit itself to one material.
“The company will be looking at all strategic minerals: diamonds, uranium, gold and copper…a wide range,” Shivolo said. “Namibia wanted its state-owned firms to be transparent, and a board will run the company as a pure business entity with the purpose of making money, for themselves (sic) and the state.”
It remains to be seen whether this company, once operational, will have the elusive essential ingredient necessary for turning around the fortunes of the economy, or whether the entity will create employment for about 40 percent members of our society who are unemployed?
However, the performance of most state owned enterprises in the country casts doubt as to whether this envisaged state entity will be the panacea to our socio-economic problems in a society where the gap between the rich and the poor is widening by the day.
Despite being aware of the declining inland diamond reserves and everything pointing towards offshore diamond mining, it is sad that the government of Namibia has not really taken a pro-active approach by positioning itself in this sector to ensure benefits to the economy and society at large.
At a function marking De Beers Marine Namibia (DBMN)’s record of 1.018 million carats produced in the Atlantic Ocean, Mines and Energy Minister Erkki Nghimtina was quoted as saying the Namibian government was aware of the dwindling land diamond reserves and was calling on “our efforts and resources” to be channeled towards marine diamond resources “considered to be the future of our diamond industry”.
Speaking at the same function, chairman of DBMN, Rob Smart announced that the government is already talking with De Beers to see how its stake in DBMN could be increased from the present 15 percent through Namdeb but until now government is yet to increase its stake in the marine mining company leaving De Beers, which owns 70 percent in DBMN with the lion’s share.
In addition to that it also owns a 15 percent stake in the company through Namdeb.
President Hifikepunye Pohamba was also quoted during that time as saying that benefits from natural resources should be utilised to benefit of the locals.
Pohamba said that the deal between government and De Beers under which the diamond mining giant agreed to sell 16 percent of locally produced diamonds to local cutters should be revised.
“It is just one step forward but some people feel that this is not yet half of normalisation of the situation. I agree 16 percent out of 100 percent? There should be a process of further normalisation of this situation,” Pohamba was quoted as saying.
With a high unemployment rate of 40 percent despite being home to some of the world’s biggest diamond and uranium deposits apart from a host of other minerals, who is really benefiting from mining in Namibia and if the majority of the people are not, who is to blame for this?
Mathew Nyaungwa, Rough&Polished from Namibia
