Diamond, uranium mining sectors projected to contract this year
The diamond and uranium mining sector are projected to contract in 2020 before a solid recovery in 2021, according to the Bank of Namibia’s Economic Outlook Update released this week.
The diamond mining sector is forecasted to decline by 14.9% in real terms during 2020 and to recover to a growth of 4.5% in 2021,
“The projected contraction of 14.9% for 2020 is a downward revision from a growth of 5.3% projected during February 2020,” the central bank said.
Meanwhile, the central bank said that uranium mining is similarly projected to contract during 2020, followed by a mild recovery in 2021.
“The uranium mining sector is expected to contract by 22.4 % in 2020, before expanding by 4.6 % in 2021,” the outlook stated.
According to the central bank, the sector is first and foremost grappling existing factors that include the insufficient supply of water required for their operations and persistently low uranium prices, viewed together with the reduction in long-term supply contracts.
“This means that uranium mines are more exposed to spot prices, which squeezes their margins. There is, however, an indication that COVID-19 and resulting travel restriction have not prevented the mines from exporting their output thus far and it may not constitute a major factor in the foreseeable future,” the BoN stated.
The central bank said the volumes produced during the first three months of 2020, were 26.4 % lower than the production for the corresponding three months of 2019, making any prospects to catch up with 2019 production levels unlikely.