• N$6.5 billion worth of diamonds for local industry
• Sovereign marketing window for Namibia
• International benchmarking
At least N$6.5 billion worth of diamonds will be pumped into the local diamond manufacturing industry once Government and De Beers sign the long-term Sales and Marketing Agreement later this month, Government revealed.
Currently the industry is supplied with 10 percent of the value of local rough diamond through the Namibia Diamond and Trading Company, which has previously said the amount is not sufficient to sustain the local diamond cutting and polishing industry.
Government through the Ministry of Mines and Energy this week indicated that the agreement “will give us a sovereign window on diamond pricing sales and marketing and establish a footprint of Namibian branded diamonds further downstream in the market”.
“The agreement is expected to be signed by end of April 2016,” announced mines minister Obeth Kandjoze when he responded to questions from this newspaper on Monday.
To maximize the potential gains of the new agreement, Namibia is currently in the process of establishing a new diamond sales and marketing company, to be christened /Nore /Uis, The company will be tasked 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.
Kandjoze expects the agreement to also result in added job creation and enhance profitability, viability as well as sustainability of the local diamond manufacturing sector.”
With Namdeb’s production currently valued at N$12.2 billion, Kandjoze said: “The new sales and marketing agreement would eclipse the current Cabinet mandate of 30% as in the old agreement while the new threshold as per the new agreement would actually be approximately 54% of Namdeb Holdings production.”
Most of the world’s rough diamonds come from a relatively small number of mines in Russia, Canada, Australia and southern African nations like Botswana, Namibia, DR Congo, Angola, Zimbabwe and South Africa.
Rough diamonds are then cut and polished, often in India and Africa, before eventually making it to the hands of traders in countries such as Belgium. Yet, polished diamond exports from Belgium have been declining 4.5 percent year on year, falling to $772 million for the month of January 2016, according to the Antwerp World Diamond Centre (AWDC), heavily impacting Antwerp’s diamond district, which is reported to employ over 8,000 workers.
In 2015, gem producers including De Beers, Rio Tinto and Alrosa formed the Diamond Producers Association, following calls from within the industry to create a body that will fund a campaign to drive consumer demand. Faced with challenges such as maintaining long-term demand for diamonds, especially among millennials, the association will dedicate a three-year $18 million budget for advertising, specifically targeting a younger demographic.
Cheaper, synthetic diamonds are marketed as a solution to the ethical and environmental shortcomings of the diamond trade which has also become prevalent in the global diamond industry.
Created inside a laboratory in just a few weeks, they are chemically indistinct from their mined counterparts. Experts say that only a trained gemologist using specialist equipment would be able to tell naturally mined and man-made stones apart.
Miners’ job security
After the Mineworkers Union of Namibia indicated last week that it was not consulted by government during the negotiations, Kandjoze said: “This is an agreement between two parties.”
“It is a commercially sensitive agreement and therefore it is confidential. However, the Government Negotiating Team has done background studies by speaking to the diamond manufacturers and by visiting neighboring countries for benchmarking purposes. Outside parties are not privy to this document,” he said.
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.
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.”
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 effort 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.