July 2021

Namibian mining industry: unlocking potential

By Fabian Shaanika

Namibia is a renowned and significant mining jurisdiction – home, amongst others, to some of the world’s largest uranium deposits and is the world’s largest producer of marine diamonds.

Therefore, the mining and exploration industry is a key driver of economic growth as it contributes approximately 10% to the country’s Gross Domestic Product (GDP).

RMB in Namibia has been a strategic partner as a financial services’ provider of this industry. RMB is a division of FirstRand Bank Limited., and it is through this affiliation that we are one of the largest financial institutions in Africa.

RMB Corporate Investment Banking has been in existence in Namibia since 2014. We work with approximately 80% of the active players in the Namibian mining industry. As a result, the bank has been offering innovative corporate banking and financial solutions to clients in Namibia for more than a decade.

RMB in Namibia remains committed to seeing and helping our clients and stakeholders through the present challenges.

Being cognisant of the value of collaboration, RMB seeks to serve alongside clients as partners and not as mere service providers.

In pursuit of these partnerships, RMB Namibia’s dedicated team continuously explores innovative solutions to meet the ever-evolving funding requirements of clients.

We continue to ensure that we have the internal capabilities of people with solid industry backgrounds to form strong partnerships with our clients and offer them tailored solutions to their requirements.

Due to the pandemic and resulting restrictions, mining’s contribution to Namibia’s GDP contracted by about 12% over the past year. Although mining was classified as a critical activity and some operations were allowed to continue at minimal levels, other operations went into care and maintenance.

Namibia in general has a diverse mix of mining operations, including base metals, precious metals, and uranium.

Overall, the impact of COVID-19 was well-buffered by the mere nature of the diversified mining portfolio of the country.

Equally, there are ongoing efforts to develop local beneficiation. For example, in the diamond industry there has been an enormous drive to promote the local cutting and polishing industry. Today, 15% of the diamond production in Namibia gets handled by a local Namibian company. Although still at feasibility stage, there are plans to increase the quantity of locally refined zinc with the possible conversion of a zinc refinery plant in Namibia.

Moreover, there are currently several projects at various stages to supply the increasing demand for minerals feeding into the battery and electrification sector. The mining industry has always been at the forefront of the transition to a green economy, by constant exploration for the various minerals, and the Namibian mining industry adheres to strict environmental regulations thereby complying well with the various ESG facets.

From an ESG perspective, there are no drastic behavioural or structural changes that have taken place or that need to take place. It is more about being able to reposition (from a reporting point of view) what is already being done towards a greener economy.

Namibia is a nett importer of power, but there are many renewable energy projects either in construction or in the feasibility phase to get access to power for mining operations. In addition, the country’s geographical location makes it the perfect candidate for both solar and wind opportunities.

Despite the potential that the sector holds, there is room for improvement in how exploration licenses are allocated. Currently, there is a complete moratorium on issuing new licenses within Namibia, which will only be removed later in August this year. It was put in place because the Ministry of Mines and Energy saw a need for improvement in the licensing process and established a new policy and regulatory frameworks.  

By the end of 2021, we will have a positive policy outcome and thus a more conducive environment.

The availability and quality of geological and geophysical data could also improve. Currently, the Geological Survey of Namibia hosts and owns the geological data sets. This information should be accessible to the public and easy to obtain to encourage exploration investment.

Most investors consider Namibia an excellent mining jurisdiction, but there remains a lack of required technical skills. More needs to be done to transfer skills to Namibian citizens.

RMB in Namibia is actively engaging all stakeholders in the mining industry to ensure its full potential is unlocked. 

 Shaanika is RMB Sector Lead: Mining and Natural Resources

 

The following interview with Fabian Shaanika was published by Global Business Reports on 5 July 2021

What role does RMB Namibia play in the Namibian mining industry?

RMB is a division of FirstRand Bank Limited, with headquarters in South Africa. Through this affiliation, we are one of the largest financial institutions in Africa. RMB Corporate & Investment Banking has been in existence in Namibia since 2014. We work with approximately 80% of the active players in the Namibian mining industry.

How significant is the mining industry to the Namibian economy?

Namibia is a renowned mining jurisdiction, home to some of the world’s largest uranium deposits, and is the world’s largest producer of marine diamonds. Namibia relies on the industry for economic growth as it contributes approximately 10% to the country’s GDP. Unfortunately, due to the pandemic and resulting restrictions, mining’s contribution to Namibia’s GDP contracted by about 12% over the past year. Although mining was classified as a critical activity and some operations were allowed to continue at minimal levels, other operations went into care and maintenance. Namibia has a diverse mix of mining operations, including base metals, precious metals, and uranium.

There are ongoing efforts to develop local beneficiation. In the diamond industry there has been an enormous drive to promote the local cutting and polishing industry. Today, 15% of the diamond production in Namibia gets handled by a local Namibian company. Although still at feasibility stage, there are plans to increase the amount of locally refined zinc with the possible conversion of a zinc refinery plant in Namibia.

What is hindering the Namibian mining industry’s growth?

There is room for improvement in how exploration licenses are allocated. Currently, there is a complete moratorium on issuing new licenses within Namibia, which will only be removed in August this year. It was put in place because the Ministry saw a need for improvement in the licensing process and established a new policy and regulatory frameworks.  By the end of 2021, we will have a positive policy outcome and (hopefully) a more conducive environment. The availability and quality of geological and geophysical data could also improve. Currently, the Geological Survey of Namibia hosts and owns the geological data sets. This information should be easily accessible to the scientific and mining fraternity and should be free (or subsidised) to encourage exploration investment.

Most investors consider Namibia an excellent mining jurisdiction, but comments on the lack of required technical skills prevail. To address this issue, we allow more expats to work within the country. The permits to work, of course, should be accompanied with an obligation to transfer skills to Namibians.

How is RMB assessing these investment opportunities in the green energy space?

There are currently several projects at various stages to supply the increasing demand for minerals feeding into the battery and electrification space.

Namibia is an importer of power but there are many renewable energy projects either in construction or in the feasibility phase to get access to power for mining operations. In addition, the country’s geographical location makes it the perfect candidate for both solar and wind opportunities. As a bank, RMB is actively engaging with mining operations to structure these projects to unlock their full potential.  

What is RMB’s strategy to facilitate growth over the next three years?  

Our strategy is to see our clients through current challenges, and we have adopted the approach to be a partner rather than a service provider. Therefore, we need to continuously look at finding novel solutions for the funding requirements of our clients. We pride ourselves in being a solutionist bank and adapting to our clients' times and challenges. We continue to ensure that we have the internal capabilities of people with solid industry backgrounds to form strong partnerships with our clients and offer them innovative solutions to their requirements.

RMB is a leading African Corporate and Investment Bank.

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