Photo: Contributed
By: Nghiinomenwa-vali Hangala
An assessment by the Chamber of Mines has noted that rising inflation will continue to weigh on mining operations, as rapidly increasing fuel and diesel prices are expected to drive long-term inflationary trends.
In its September 2026 monthly report, the chamber noted that higher fuel and diesel prices are increasing operating costs across the mining sector.
This has eroded the margins of profitable mines and intensified financial pressure on loss-making operations.
Some domestic mine developers have even postponed their financial investment decisions on one of the key projects.
In response to a persistent inflationary environment, it is expected that central banks across the globe will continue to hike interest rates to cool inflation.
The chamber has noted that a cycle of higher interest rates will slow economic activity in major industrial sectors, which will weaken the demand for corresponding mineral commodities and put downward pressure on the price environment.
“Persistent inflation and high interest rates add uncertainty to the mining investment outlook,” the chamber wrote.
Adding that although long-term fundamentals for minerals such as gold, uranium, copper and other critical minerals remain strong, higher financing and operating costs could delay mine expansions, new developments and exploration.
The chamber’s researchers explained that it is too early to determine the longer-term impact of higher inflation and higher interest rates on the mineral commodity prices relevant to Namibia’s mining sector.
The two phenomena, however, are a shadow of uncertainty on future prices and investment decisions by miners.
It is also unclear how much these pressures will offset the positive longer-term demand fundamentals, particularly for gold, copper and uranium.
Lower expected production has contributed to the Bank of Namibia’s downward revision of its 2026 mining forecast.
The mining sector is now projected to contract by 6.2%, compared with 2.2% in the previous outlook.
The downward revision in this forecast is aligned with the lower year-to-date production trends that have been recorded so far this year.
Despite the short-term developments, the Chamber of Mines anticipates higher average gold and uranium prices to offset lower production volumes.
This is expected to support overall export earnings and government revenue contributions from mining companies.
For the month of September, the Mining Production Composite Index declined by 4% month-on-month, driven by a 12% fall in diamond production.
Uranium, zinc and gold production have risen by 8%, 27% and 4% respectively month-on-month.
However, due to the larger weighting of diamonds in the overall index, the gains recorded in the aforementioned minerals were not enough to offset the monthly reduction.
The Chamber also expects the overall output for mining in 2026 to be negative.
This is evident from the annual average growth rates for diamonds, uranium, zinc and gold, which have recorded 0%, -2%, -15% and -29%, respectively.
Although overall mining production increased by 8% year-on-year in the latest reporting month, “this improvement has not been sufficient to offset the weaker production performance recorded earlier in the year,” the Chamber noted.
The Namibian export basket is heavily dependent on mining with the top 5 products being minerals except for fish.
As a result, fall in production affects foreign currency generation, and taxes collection.
Diamond and gold have been big corporate tax payers.
As for the month of August the 14 mineral-related categories in the export series generated N$6.69 billion, representing 72% of domestic exports, up from 62% in July.
Uranium was the main contributor to the overall increase, with domestic uranium exports rising 438% month-on-month.
Namibia exported N$3.4 billion worth of uranium in August 2026.
This followed the resumption of full production at the Husab mine in July after its 22-day planned plant maintenance in June, with the higher output reaching export markets in August, the Chamber noted.
Gold exports fell 21% over the same period, while diamonds rose 5%. For the month of August 2026, Namibia exported N$1.5 billion worth of non-monetary gold and N$1.46 billion worth of gold.
According to the Chamber of Mines, near-term output and macroeconomic pressures pose downside risks to sector growth.
They expect firm gold and uranium prices and a pipeline of new projects and expansions to remain supportive of a positive medium- to long-term outlook for Namibia’s mining sector.
The sector is supported by four major mines and project expansions coming online, including: Bannerman’s Etango Uranium Project, Reptile Uranium’s Tumas Uranium Project, and Osino Resources Twin Hills Gold Project, which is anticipated to enter production in the second half of 2027.
The Langer Heinrich Uranium mine is also expected to ramp up production, while the expansion project of the Rosh Pinah Zinc is also on the cards.
erastus@thevillager.com.na
