Dissecting the second quarter

The latest year-on-year primary sector growth figures in the second quarter this year show a contraction of 31.9% in agriculture and forestry, a contraction of 0.4% in fishing and an expansion of 32% in mining and quarrying. Gold production saw significant increases in both the yearly and quarterly aspects throughout the second quarter of 2023. These significant boosts were mainly attributed to the extraction of high-grade ore from one of the mines. Yearly gold production surged by an impressive 42.3%, while quarterly production experienced a notable 7.7% rise, resulting in a total output of 2 031 kg.“The buoyant production was ascribed to high grade ore mined from the open pit, coupled with the partial completion of part of the underground mining area at one of the mines during the quarter under review,” the BoN said.In the quarter under review, international gold prices displayed a notable uptick, rising by 5.6% annually and 4.8% quarterly. The average price per ounce reached US$1 978 during this period. This surge was primarily attributed to investors seeking refuge in gold due to persistent global inflationary pressures and instability in the banking sector, according to the central bank.ZincZinc concentrate production experienced declines in both the annual and quarterly comparisons during the reviewed quarter. These reductions were primarily driven by the extraction of lower-grade ore, the BoN said. Specifically, zinc concentrate production decreased by 11.8% on a yearly basis and by 20.3% on a quarterly basis in the second quarter of 2023.“The decline was largely due to lower-grade ore mined, owing to a reduction in the mineral content in the ore body, alongside unfavourable zinc prices,” the central bank explained.The global zinc price experienced substantial decreases in both its annual and quarterly comparisons, plummeting by 35.1% and 19%, respectively, to an average of US$2 540 per metric tonne during the second quarter of 2023. This significant decline in zinc prices was attributed to the sluggish state of the global economy, which resulted in reduced demand for zinc, according to the BoN.ExportsExport revenue from other minerals exhibited contrasting trends in the second quarter of the year. On an annual basis, it surged by 49%, reaching N$3.1 billion. However, on a quarterly basis, it dipped by 8.7%. This fluctuation was primarily influenced by developments in the volume of gold exported, the BoN said.The annual upswing in export earnings from other minerals was attributed to several factors, including increased gold volumes exported, higher gold prices, and a weaker local currency. In contrast, the quarterly decline was chiefly due to a decrease in the volume of gold exported, the central bank continued.Conversely, zinc concentrate proceeds dwindled by 56.7% annually and 61.5% quarterly, amounting to N$103 million. UraniumUranium production exhibited notable increases in both the annual and quarterly perspectives during the second quarter of 2023, primarily attributed to specific factors affecting the comparison periods. Uranium production recorded a rise of 32.8% annually and 7.5% quarterly, reaching a total of 1 967 tonnes of uranium oxide.According to the BoN, the annual increase was primarily linked to low base effects stemming from water supply challenges encountered in the preceding year, compounded by a reduction in production hours due to labour strikes at one of the uranium mines in the second quarter of 2022. On the other hand, the quarterly upturn was attributed to the extraction of higher-grade ore in comparison to the previous quarter.Concurrently, the international spot prices of uranium saw year-on-year and quarter-on-quarter increases of 8.7% and 7.6%, respectively, reaching an average of US$54.53 per pound during the same period.“The rise was primarily attributed to an increase in global demand for nuclear fuels as countries continue to push towards decarbonisation. In addition, energy security issues as a result of sanctions imposed on Russia by the US and EU governments has equally contributed to the rise in the prices of uranium,” the BoN said.ExportsDuring the second quarter of 2023, export revenues from uranium showed divergent trends when viewed annually and quarterly. Annually, export earnings from uranium increased significantly by 41.4%, amounting to N$3 billion. This growth was driven by robust uranium export volumes, the depreciation of the domestic currency, and higher US Dollar prices, the central bank said.However, on a quarterly basis, uranium export receipts declined by 12.7%. This reduction was primarily attributed to decreased volumes of uranium exported during the period under review, the BoN said.DiamondsDiamond production experienced contrasting trends in the quarter under review, with an annual increase but a quarterly decline. On a yearly basis, diamond production surged by 8.8%, reaching 617 780 carats during the second quarter of 2023. The BoN attributed the increase to the extraction of more carats on land operations, driven by the ongoing expansion of the mining area, as well as additional output from the Benguela Gem offshore operations.Conversely, on a quarterly basis, diamond production dropped by 2.3%, down from 632 311 carats. The decline was primarily associated with reduced carats mined onshore, partly due to the suspended mining activities at the Sperrgebiet mine, which had been placed under care and maintenance in March 2023. Additionally, there were fewer carats extracted from the land-based mines during this period, the BoN said.ExportsExport revenues from rough diamonds saw increases in both annual and quarterly comparisons, driven by higher export volumes and a devalued currency. Despite a decline in realised diamond prices, rough diamond export earnings rose by 9.2% annually and 1.1% quarterly, reaching N$3.9 billion.“The increase reflects an expansion of export volumes, further reinforced by the local currency depreciation,” the BoN said.CattleThe quantity of cattle sold increased both on an annual and quarterly basis during the reviewed quarter, primarily attributed to attractive prices offered by export abattoirs. The overall number of cattle marketed grew by 11.2% year-on-year, reaching 80 476 heads in the second quarter of 2023. This rise was particularly evident in the number of cattle slaughtered for exports, which increased by a substantial 43.9% to 34 371 heads.“This was primarily on the back of better producer prices offered by the export abattoirs during the quarter under review,” the BoN said.The number of live weaners exported and the number of cattle slaughtered for local consumption both experienced declines of 6.1% and 0.8%, respectively, amounting to 35 968 heads and 10 140 heads. The decrease in live weaner exports was attributed to reduced demand from South Africa, where feedlots were grappling with an oversupply in the market, according to the BoN.In a quarterly comparison, the number of cattle marketed witnessed a substantial uptick of 37.2% during the second quarter of 2023, compared to the preceding quarter. This increase was particularly notable in the number of cattle slaughtered for exports and live weaners exported, which surged by 113.9% and 18.2%, respectively, up from 16 070 heads and 30 436 heads.“The rise was due to a rise in marketing activity by farmers, as farmers reduced stock in preparation for the drought,” the BoN said.Meanwhile, the seasonally adjusted quarter-on-quarter data for cattle marketing activity indicated a more modest increase of 3.2% during the reviewed quarter.Small stockThe volume of small stock marketed exhibited growth both on an annual and quarterly basis in the second quarter of 2023, evident in the categories of small stock slaughtered for exports and live exports. Year-on-year, the number of small stock marketed increased by 16.2%, reaching 313 503 heads during the reviewed quarter. This annual rise was notable in the numbers of small stock exported live and those slaughtered for export, which increased to 256 676 heads and 31 348 heads, respectively, up from 213 284 heads and 12 988 heads. This growth was primarily attributed to the expansion of the national herd size, driven by favourable rainfall received during the 2021/22 season, the BoN said. The resumption of slaughtering activities at the Farmers Meat Market abattoir in Mariental, along with attractive prices offered by export abattoirs, contributed to the upsurge in small stock marketing activity, the central bank added.MarketingConversely, the number of small stock slaughtered for local consumption experienced a substantial annual decline of 36.5%, dropping to 27 685 heads during the reviewed quarter. This was due to farmers choosing to sell their animals to export abattoirs, enticed by better prices offered by these facilities, according to the BoN.Similarly, on a quarterly basis, the volume of small stock marketed surged significantly by 65%, rising from 190 023 heads. This increase was driven by heightened demand from South Africa and export abattoirs, as well as improved local demand, the BoN said. However, when accounting for seasonal variations, the seasonally adjusted small stock marketing series recorded a more modest quarter-on-quarter growth of 4.8%.MilkMilk production exhibited contrasting trends in the quarter under review, with a decline on an annual basis but an increase on a quarterly basis. Year-on-year, milk production decreased by 1.6%, totalling 3.8 million litres in the second quarter of 2023. This decline was largely attributed to the absence of spent grain as a feed input, a significant rise in the price of lucerne, and strong competition from cheaper imports during the reviewed quarter, according to the BoN.Conversely, on a quarterly basis, milk production surged by 8.8% compared to the previous quarter, reaching 3.5 million litres.ExportsExport revenues derived from the category of food and live animals displayed growth in both annual and quarterly comparisons, primarily propelled by increased earnings from unprocessed fish and small stock exports. The overall value of food and live animals exported surged by 28.5% annually and 18.9% quarterly, reaching N$900 million. This increase was primarily underpinned by higher export earnings from small stock and unprocessed fish, the BoN said.“The increase in export earnings from small stock was on the back of higher volumes exported to South Africa, while unprocessed fish increased in line with the weaker currency and increased volumes exported to countries such as Botswana and Spain,” the BoN elaborated.PricesAverage prices for weaners and sheep experienced declines both on a yearly and quarterly basis. The average prices for weaners dropped by 36.2% annually and 22.1% quarterly, reaching N$24.97 per kg. Similarly, the average prices for sheep fell by 12.8% annually and 3.9% quarterly, settling at N$53.21 per kg. These decreases in weaner and sheep prices were attributed to elevated feed costs and weaker consumer demand in South Africa compared to the same period last year, according to the BoN.Conversely, beef prices recorded increases of 1.2% annually and 0.2% quarterly, rising to N$60.04 per kg. According to the BoN, this uptick in beef prices was supported by sustained demand and limited supplies in northern European markets.

Dissecting the second quarter

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Dissecting the second quarter

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