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Global crisis has major impact

Langer Heinrich mine

Langer Heinrich mine

Since profitability in the mining sector depends on the export of minerals, commodity prices have a direct impact on the bottom line. The sector has recouped from the 2009 implosion but commodity prices have not returned to the pre-crisis levels. In addition to a difficult marketing enviroment, local mining companies have to deal with operational constraints, labour issues and environmental concerns
The mining industry, which is considered to be the backdrop of the country’s economy, affects the overall performance of the economy. Preliminary results of the National Accounts released by the Namibia Statistics Agency, indicate that the primary sector, which includes mining and quarrying, declined by 8.5% in 2011. The poor performance is reflected by the reduction in the output of uranium and diamond mining. Real value added to the uranium subsector fell by 27.3% in 2011, while output of the diamond subsector declined by 2.6 %.
Australian engineering company, AMEC Minproc, which conducted feasibility studies on Langer Heinrich and Rossing South Uranium in 2011, found that some of the challenges when mining in Namibia include poor infrastructure, particularly in terms of water and power supply. According to the engineers, these resources are seen to be poorly developed in much of the country and the provision of the services to remote projects is a major obstacle. Another challenge is the lack of human resources where a shortage of skilled professional and technical personnel is seen in mining and related fields.
According to the company’s African Operations Managing Director, Colin Kubank, the exact location of the mineral 
deposit and road access can also create 
issues. Thus, companies are faced with the challenge of constructing this supporting 
infrastructure when developing mining projects in the country. Kubank however stated that despite the challenges, Namibia’s  rich supply of mineral resources and positive government attitude make it a popular destination for investors,
He said that the country is expected to remain an attractive destination for mining investment as a consequence of its mineral resources, political stability and government, which is keen to develop its mining potential. Consequently, Kubank envisaged a bright future for the country’s mining industry and stated that there is an opportunity for AMEC Minproc to participate in the Namibian mining industry
In a presentation to the Chamber of Mines, entitled The Mining Industry in Namibia: Current  Challenges and Future Possibilities, economist Robin Sherbourne emphasised the fact that mining is a long term busines therefore government action should not be dependent on individual discretion but on clear long term policies.
He added that although the mining industry had experienced challenges in the past, mining revenues are cyclical and therefore treating all revenue as current income, is short sighted. Government, according to Sherbourne, needs to ensure that the Ministry of Mines and Energy is appropriately sourced and the revenue must be used to achieve this. Sherbourne says mining alone will not solve the unemployment problem hence more imaginative policies are required, but he does point out that the multiplier effect in the mining sector is the biggest of any local sector, and that mining’s contribution to the broader economy is huge.

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