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Tuesday 22 January 2019
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Diamond deal

Diamond1 copyDiamond2

The winners

 

  • Namibia biggest winner – Rise in revenue to N$6.73 billion annually
  • More jobs: More local jobs to be created from diamond processing and supporting streams
  • De Beers gets long term sales commitment

 

While the real value is possibly hidden in the detail, local and regional mining experts have hailed the diamond sales deal signed this week between Namibia and De Beers as the best to advance beneficiation for the country. Time will tell the deal’s real value and extent of its genuineness for the local economy. MATHIAS HAUFIKU reports

With De Beers having cemented its access to Namibian diamonds for the next decade – a deal worth N$67 billion – Namibia managed to squeeze an additional five percent out of the two-year negotiations that led to the clinching of the deal.

This also guarantees De Beers room to maneuver in the €35 billion a year to the world’s most notorious arena for diamond exchanges – Belgium.

The 10-year sales, sorting and valuing agreement signed by De Beers and Namibia, has once more exposed African governments’ lack of human resource when it comes to mining its own resources. The signed agreement will generate N$6.73 billion annually for the country.

The deal is widely expected to result in the creation of more jobs and diamonds for the local market, unlike in the past where it was the other way around. De Beers is not new to long-term agreements, having entered into a similar deal with Botswana in 2011.

Like in Botswana, diamonds are not only a sign of opulence, but rather a mirror-image of the country’s mineral wealth.

Although not much has been said about the envisaged Namibia Desert Diamonds company, its establishment continues to be a mystery, but until then Namibians will take solace in the fact that Namdeb Holdings will for the first time supply diamonds of all sizes, shapes and qualities to the Namibia Diamond Trading Company’s clientele base.

The new company will distribute 15% of Namdeb Holdings’ total production and will serve as Diamond Sales and Marketing Company that will be used as a window on the market to find out what the international market is willing to pay for rough Namibian diamonds.

“This would allow for local diamond cutting and polishing factories to operate at full capacity and create more jobs as to enhance their profitability and sustainability,” said mines minister Obeth Kandjoze at the signing ceremony.

“A diamond doesn’t start out polished and shining. Undiscovered, it remains nothing special, but with enough pressure, expertise and application of skill, it becomes spectacular. Today we are here to celebrate a small commodity with a high concentration of value and its impact on trade, development and prosperity,” he said.

Chief Executive Officer of De Beers Group Phillippe Mellier said he was pleased that the generated funds have always proved to go towards socio economic developments in the country.

The deal comes at a time when local diamond polishers are calling for government subsidised prices to assist the shrunken industry during the current economic climate.

Polishers want assistance until such a time that the local polishing industry can stand on its own. The local industry has been so fragile that a number of factories had to shut their doors. Most companies operating in the local polishing industry are subsidiaries of larger global groups.

Those in the industry are wary that the insistence for 100% of the supply to be polished locally, despite the level at which factories operate, could lead to backlogs of unpolished rough diamonds that may create losses in an economic environment in which turnover is critical.

 

 




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