By Thomas Aipanda
Mining is still a cornerstone of the Namibian economy, contributing significantly towards GDP. However, the success and contribution of the industry are influenced and shaped by global commodity prices.
The relationship between the mineral industry & metals market is closely intertwined as each affects the other directly or indirectly through supply and demand dynamics.
Significant shifts in the markets have occurred in the last 24 months and have significantly impacted the Namibian mining industry landscape in different ways.
The most notable commodity to have made a positive impact is Uranium. The metal’s price has increased by over 230% since January 2022. Uranium is currently trading at a spot price of $106/lb, with intense speculation that this price will continue to rise amidst increased demand.
The price rally is driven by recent changes in geopolitical dynamics regarding energy security of supply between Eastern and Western Europe and the global need for a reliable carbon-free base load.
To fully understand the impact of this price development, we need to appreciate the size of our Uranium resources. Namibia holds an estimated 560,000 t of recoverable Uranium oxide and is ranked 5th largest uranium resource in the world. With the upward movement in uranium prices, the position of uranium projects in the country has been significantly strengthened. The country’s uranium reserves, generally regarded as lower grades and with marginal returns, are shifting towards economic feasibility. This improvement in market conditions means that a broader array of mining projects can now attract the necessary funding for development, marking a momentous turnaround for Namibia’s uranium sector.
This has already manifested through the restart of Langer Heinrich Mine, the issuance of mining licences to the Bannerman Resources’ Etango project, and the Deep Yellow Tumas project.
Other eminent projects likely to see bankable feasibility studies completed include the Forsys Metal, Valencia project and Areva’s Trekkopje project.
Intensive uranium exploration is also underway with Madison Metals and Elevate Uranium. Their tenements exhibit shallow mineralisation that is amenable to low-cost mining.
Russia’s Rosatom, through its subsidiary Uranium One, is also proposing the controversial in-situ leaching for its existing tenements that require minimal capital. Existing mines such as Rossing and Swakop Uranium are expected to continue turning good profit margins as they can now sell their surplus production out of contract on the market at spot price.
Lithium, recognized as a critical future metal, is also found in Namibia. Unlike Uranium, Lithium prices have negatively impacted the Namibian mineral landscape.
The metal price rally was previously anchored in the popularity of lithium-ion batteries in the development of electronics and electric vehicles. This led to a record price of (Chinese Yuan) CYN 597,000/t in 2022. The price took a sharp dive as early as the first quarter of 2023 and hit rock bottom in 2024, trading at just CNY 97,500/t, representing a 612% drop in price since February 2022.
The general view is that the demand for the metal was overstated and highly speculative; as a result, the market went into oversupply. Forecasted electric vehicle sales in China and Europe have also not been convincing to recover its price. The impact on Lithium assets in Namibia is harmful, especially for many late adopters or investors who may have acquired these tenements at a premium during the rush. The price downturn could have long-term implications for developing Namibia’s lithium resources.
While the country holds Africa’s fourth largest lithium resource, the current market conditions might delay the entire development and exploitation of this potential, as the price trend challenges the financial viability of existing and potential lithium projects. Despite the slump in price, lithium remains a crucial commodity for the transition to green energy. Some of Namibia’s flagship lithium projects include Lepidico’s Rubicon & Helikon projects, Andrada’s Uis Mine and Xinfeng Investments’ Omaruru project. Exploration work, though limited, continues with tasks such as Arcadia Minerals’ Bitterwasser Brines project.
Copper is another notable future-looking commodity. Its price has been relatively stable over the last decade despite a 20 % drop since 2022. The metal currently trades at US$3.7/lb. The demand-supply dynamics are predictable and are underpinned by the consistent demand for electrical components.
Despite the recent price drops, sentiments remain optimistic for the resurgence of the price with continued global economic growth and its bottomless need in utilities and related industries. Despite prolonged inactivity in copper mining, key copper projects in the country include Trigon Metal’s Kombat Mine, which is busy ramping up.
After acquiring the assets from Weatherly, Consolidated Copper Corp’s group of mines is also working towards restarting the Tschudi, Matchless, Otjihase & Berg Aukas Mines.
Most of Namibia’s copper deposits are relatively low grade in size and quality, exposing them to significant risk with price movements. There are, however, significant activities in the exploration and resource definitions phase with flagship projects such as Noronex exploration on the Kalahari Copper Belt.
Koryx exploration is also advancing their Haib project. Omica Copper’s Omitiomire project also has an ongoing feasibility study to pave the way for construction financing options. These projects are expected to continue with resource definition, especially if the price recovers.
The gold price has also been stable over the last two years, and the current trading price of US$2,018t/oz represents an all-time high price over the last decade. This means the country is witnessing the best years for gold miners in history.
Gold has long been considered a haven during global economic and political turmoil.
The price direction thus suggests global sentiments such as the war in Russia and the Middle East and generally reduced global economic growth.
These reasonable prices enable gold tenements in Namibia to gain traction in development through exploration or construction financing. Although Namibia has several gold targets, they are of lower grade in size and quality than other deposits elsewhere.
This reality makes them dependent on higher prices to attain viability status. The record prices observed should make most gold tenements attractive for further exploration or funding for construction. Apart from existing operations, QKR Navachab Mine & B2Gold Otjikoto Mine and the famous Osino Resources Twin Hill Project are due for construction in 2025 and will be Namibia’s next flagship gold operation.
Osino Resources has attracted the attention of several potential buyers following the recent completion of their bankable feasibility study and terms sheet for construction funding. Dundee Precious Metals’ all-inclusive offer of $4 billion is being challenged by an unnamed major corporation that bid $5 billion for Osino’s assets.
Another project of note is WIA Gold & Epangelo Mining’s Kokoseb Gold project in Okombahe, which promises to boost Epangelo Mining’s presence in the mining industry. The project’s resource definition continues and will hopefully attract more funding to conclude exploration and mining viability.
The minerals markets have favoured mainly the Namibian mineral landscape; this is evident given that exploration expenditure has increased from N$806.4 million in 2021 to N$ 964.9 million in 2022. Although 2023 figures are not released, they are expected to be significantly higher. The price increase has enabled capital expenditure for exploration and resource definition and funding considerations for construction and subsequent mining. These are important for our relatively low-grade deposits and will allow Namibia to maximise utilising its natural resources. Exploiting mineral resources enables the Namibian economy to benefit through job creation, foreign currency earnings, corporate taxes, and royalties by selling commodities. Besides the commodity prices, factors such as the regulatory environment and political stability continue to shape the mining industry landscape in the country positively.
Namibia’s high ranking on the Fraser Institute’s Policy Perception Index (PPI) as 3rd in Africa highlights its stable and attractive policy environment. This ranking underscores the country’s success in making Namibia the preferred mining investment destination.
