4 December 2017

Namibia: Little Value Addition Success in Mining - IPPR

While there is value addition on some products within the mining sector, not much success has been witnessed though.

This was the conclusion of the Institute for Public Policy Research in a report on the beneficiation of mineral products in Namibia where they looked at the impact, constraints and options for beneficiation in the mining sector.

IPPR launched the report in Windhoek on Thursday.

In their report IPPR said that while government has placed focus on value addition in the mining sector for many years, the efforts have not been successful.

IPPR also highlighted that apart from the value addition efforts not being successful, the mining industry is also subjected to relatively high taxes.

The report does however point out the cutting and polishing of diamonds, production of uranium oxide from uranium ore, zinc refining and copper cathode production as some of the value addition projects being carried out in the country.

While steel making and gold refining have been identified as beneficiation opportunities, the report pointed out that "the commercial viability and sustainability of each prospective beneficiation activity needs to be examined within its context" to consider whether the beneficiation opportunities should be pursued.

Ohorongo Cement is referenced as a successful upstream beneficiation and potential domestic textile manufacturing for personal protective equipment and clothing," the report reads.

One of the authors of the report, Robert McGregor in a presentation at the launch said that the mining sector only employs 2,2% of the country's workforce. The report points out that one of the positive effects of beneficiation is the creation of employment as well as domestic industry growth and a lower import bill.

The report warned that pursuing beneficiation at all costs should be avoided as any possible gains because the commodity industry is characterised by the economic participants in the market.

"Thus, in many instances, beneficiation should not be pursued at all costs in order to achieve these positive effects, as the consequences could prove worse than the possible gains," the report reads.

It further reads that potential beneficiation activities and already present mining beneficiation operations may be threatened by domestic water and energy security, adding that beneficiation would require cheap, reliable energy supply.

According to the report, Namibia needs sufficient infrastructure to meet demand requirements, a regulatory framework for the different mining activities and an investment climate.

The report emphasised that beneficiation should not be seen as a mining responsibility but that there should rather be specialised manufacturing companies.

"In essence, miners should be able to remain miners, while manufacturers should be positively incentivised to set-up shop in the country to develop the value-chain of certain strategic minerals," the report concluded.

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