Namibia’s diamond and uranium mining sectors are projected to contract in 2020 before a solid recovery in 2021, according to a Bank of Namibia (BoN) report.
The diamond mining sector is forecast to decline by 14.9 percent in real terms during 2020 and to recover to a growth of 4.5 percent in 2021, BoN’s Economic Outlook Update released Tuesday said.
“The projected contraction of 14.9 percent for 2020 is a downward revision from a growth of 5.3 percent 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 percent in 2020, before expanding by 4.6 percent in 2021,” the outlook stated.
According to the central bank, the sector is grappling with 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 percent lower than the production for the corresponding period in 2019, making any prospects to catch up with 2019 production levels unlikely.
