Namibia’s Mining Sector Faces 6.2% Contraction as Diamond Slumps and Rising Costs Bite

The mining sector is facing a difficult harsh times, with declining production, a struggling diamond industry and rising fuel costs putting pressure on mining operations, while the government faces risks to revenue from one of the country’s most important economic sectors.

The Bank of Namibia has revised its 2026 mining-sector forecast from a contraction of 2.2% to 6.2%, according to the Chamber of Mines of Namibia’s September 2026 Monthly Mining Update, released on 19 October.

The revised forecast reflects weaker production recorded during the year, with figures provided by the Chamber showing that the challenges extend beyond diamonds to other major mineral subsectors.

In written responses to Business Pulse 360°, the Chamber`s Chief Executive Officer, Fabian Shaanika said year-to-date gold, zinc and uranium production had declined by 29%, 15% and 2%, respectively, compared with the corresponding period in 2025.

These declines raise questions about the industry’s ability to maintain production and sustain its contribution to economic growth, even as favourable prices for some minerals continue to support export earnings.

The Chamber’s September update shows that Namibia’s Mining Production Composite Index declined by 4% month on month in August, driven by a 12% fall in diamond production.

Although uranium production increased by 8%, zinc by 27% and gold by 4% during the month, the gains were insufficient to offset the diamond decline because diamonds carry a larger weighting in the index.

The Shaanika attributed the diamond industry’s difficulties to subdued global demand for natural diamonds, declining international prices and growing competition from laboratory-grown diamonds.

It said Namdeb and Debmarine Namibia had reduced production over the past two years in response to weak prices and market demand, eroding revenue and profitability across the industry.

The consequences extend to government finances. According to the CEO, lower diamond sales have reduced mineral royalty contributions, while declining profitability has constrained corporate income tax receipts. Government dividend income from its direct 50% shareholding in Namdeb and Debmarine Namibia through Namdeb Holdings has also come under pressure.

Mining companies are also facing higher operating expenses as international fuel prices rise.

The Chamber’s September update reported that Brent crude averaged US$116.80 per barrel, up 28.5% from August. Namibia’s headline inflation increased to 5.4% in September from 5.0% in August, while transport inflation reached 14.9% year on year.

Petrol and diesel prices rose by 30.4% over the period cited in the statement, adding to mining operating costs and reducing profit margins.

Shaanika said diamond producers face particular difficulties because weaker selling prices and rising production costs are squeezing profitability simultaneously. Marginal producers, including those in the salt industry, are also vulnerable because of narrow operating margins.

Higher costs could affect investment decisions, especially where projects depend on substantial upfront capital and long development periods.

Despite the production downturn, minerals accounted for 72% of Namibia’s domestic exports in August, valued at N$6.69 billion out of total exports of N$9.33 billion.

Uranium exports surged 438% month on month to N$3.36 billion after the Husab mine resumed full production in July following planned maintenance in June.

The Chamber expects favourable gold and uranium prices to help offset lower production volumes in the short term, supporting export earnings and government revenue.

However, the sharp increase in uranium exports should not be confused with an equivalent increase in production. The export surge followed the resumption of operations at Husab, while the Chamber’s year-to-date figures show uranium production remained below the previous year’s level.

Despite the immediate challenges, Fabian Shaanika, Chief Executive Officer of the Chamber of Mines of Namibia, maintains that the sector’s medium- to long-term prospects remain positive, supported by firm gold and uranium prices and a pipeline of new mining projects and expansions.

In the Chamber’s September 2026 Monthly Mining Update, Shaanika said: “Near-term cost and macroeconomic pressures are real, but firm gold and uranium prices and a strong project pipeline keep the outlook for Namibia's mining sector positive.”

Shaanika futher identified several developments expected to support future growth, including Bannerman Energy’s Etango uranium project, Reptile Uranium’s Tumas project, Osino Resources’ Twin Hills gold project, the continued ramp-up of the Langer Heinrich uranium mine and the Rosh Pinah RP2.0 expansion.

However, the challenge is converting that project pipeline into actual production, investment, employment and government revenue while existing operations contend with weaker output and rising costs.

For now, Namibia’s mining sector remains a major source of export earnings, but its immediate performance is under pressure. Whether new projects and stronger mineral prices can compensate for the current production weakness remains a central question for the country’s economic outlook.