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Monday 21 January 2019
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Diamonds for Namibia

Hon.-Obed-Kandjoze

Hon.-Obed-Kandjoze

As government and De Beers are preparing to enter into a long-term diamond agreement, the union representing mine workers urged government to ensure that job security of workers tops the agenda. The Mineworkers Union of Namibia, which represent over 3000 diamond miners, lamented the lack of job security in the mining sector when it threw its weight behind the looming deal, saying: “This is the right move for the country because it cannot have minerals and yet own  nothing or no control of its resources.” Mining companies in the highly volatile but lucrative diamond industry have a history of violating workers’ rights with impunity while at the same time transferring millions to their parent companies abroad. Namibia has long been a spectator when it comes having a say on how its natural resources should be spent. The proposed agreement is expected to give Namibia direct access to the market facilitate the development of the downstream diamond industry. Foreign mining companies have been accused in the past of investing little of their profits in Namibia, an unethical practice MUN is all too well familiar with.

MUN president Raimo Hausiku said there are concerns in the diamond cutting and polishing sector because of the number of companies that continue to close down which results in massive job losses. Hausiku said: “The changes that we want see take place is that all the mining sector must be properly monitored because they[mining companies] have a tendency of violating the laws of this country.” “This can only change once we have 100% ownership of the business sector, but in the mean time we need more investors to develop our country and impart knowledge and skills to the Namibian people,” he said. This should be closely monitored to make sure that other sectors where we are capable to do the work ourselves must be done by our own people, warned Hausiku. Hausiku said MUN was not consulted or approached for input during the negotiation period, but expressed confidence in government to strike a deal that protects workers as well. “By the look at the agreement I’m very much aware that government had the Namibian people and it’s economic at heart. Any effort that the government is making is to create employment, we therefore support the government in all efforts they make,” said Hausiku.

This agreement is favourable for us because it will open doors for employment opportunities, Hausiku said, adding that his union expects the agreement to ensure job creation “which will eventually develop skills of Namibia people in the sector. Currently, the industry is supplied with 10 percent of the value of local rough diamond through the NDTC, which has previously said the amount is not sufficient to sustain the local diamond cutting and polishing industry. Final touches Minister of Mines and Energy Obeth Kandjoze last week announced in the National Assembly that negotiations on a the Sales and Marketing Agreement with De Beers that will pave the way for increased supply of rough diamonds to the local diamond manufacturing industry is now finalised. Although he did not give the exact date on which the deal will be clinched, Kandjoze yesterday said the deal will be sealed “anytime from now on”. Without going into much detail, Kandjoze said the Government Negotiating Team, which led the negotiations came across some irregularities after it spotted that some clauses that were supposed to be omitted from the final contract were still intact.

The new Agreement will supply about half of Namibia’s diamonds of all sizes, shapes and qualities to our local manufacturers. “This would allow our factories to operate at full capacity, create more jobs and enhance their profitability and sustainability. Additionally the new agreement will usher into being a 100% Namibian Government owned Diamond Sales and Marketing Company,” he said. The company’s mandate will be to sell a 15% representative cut of Namdeb Holdings’ rough diamond production while the same outfit will establish a Namibian diamond brand in the downstream market, according to Kandjoze.In the early 2000s, Namibia wanted to sell its diamonds outside the De Beers agreement but that plan was quietly buried and only revisited when former Mines Minister, Isak Katali resurrected calls to form a state-owned diamond marketing company.

The ‘delivery entitlement’ clause
In the past, De Beers Société Anonyme had a ‘delivery entitlement’ clause inserted in the agreement, a move which experts in the industry said was meant to regulate the flow of Namibian diamonds into the international diamond market, by deciding when, the quantity and quality and at what price to buy Namibian diamonds. “That clause is out of the new agreement, meaning De Beers will not set the price as was provided by the clause. We will not be obliged to do business along those lines anymore,” Kandjoze told the state-owned New Era newspaper last year.
“The delivery entitlement provision that allows De Beers to choose not to buy mine production during depressed market conditions poses high risk for mining operations because Namdeb bleeds while they scout the markets. They used to call the shots, this is not the case anymore,” he said at the time. He nevertheless said the new entity, /Nore /Uis, would not be competing with Namibia Diamond Trading Company (NDTC) which sells to the local diamond cutting and polishing sector. De Beers Société Anonyme operates as a subsidiary of Anglo American and is a holding company to subsidiary diamond mining and exploration companies across the world, including the De Beers Holding, which jointly owns Namdeb with the Namibian government on equal shares, as well as De Beers Marine Namibia where government has had 30 per cent shareholding.

The 2010 Botswana and De Beers deal
Botswana and De Beers entered into a similar agreement in 2010, but the Botswana Diamond Workers Union representing diamond miners in the neighboring country felt that workers were excluded from the crafting of the agreement despite the fact that they play a vital role in the extraction, manufacturing, and marketing of Botswana’s gem stones.” Workers were also worried that their interests and concerns relating to the environment suitable for diamond production were not taken on board in the overall strategy of the proposed relocation of Diamond Trading Company International from London to Gaborone. “We have observed an unpleasant scenario whereby these communities are left in dire poverty whilst the revenues from these mines are enjoyed by the elite classes in urban areas,” stated the union at the time adding that those communities have been denied the right to use the land allocated for mining for an alternative means of earning a livelihood. The agreement will boost the country’s Diamond hub dream and help the secondary diamond trading while it will simultaneously make sure the South African diamond company access to uninterrupted supply of rough diamonds from Debswana, Botswana’s government said at the time.

Chairman of De Beers, Nicky Oppenheimer, summed up the new arrangement at the time, saying: “It is a negotiation that is not easy; but I am happy that the agreement is fair to both sides.” The deal is fair to Botswana because, for the first time, the country will have direct access to the market as it will sell 10 percent of Debswana production independently from De Beers. This will allow the country to ‘judge’ the market and get better value for its produce. The current market trends are that emerging diamond producers are getting fair values from their produce in auctions and alternative markets that include India and China. Since it started mining diamonds in the 1970s, Debswana has been selling its diamonds exclusively to De Beers. This monumental development should now enable De Beers customers/ sightholders to purchase their rough diamonds from Gaborone and initiate the much needed critical mass for secondary diamond trading in Gaborone.




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