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Sunday 20 January 2019
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Diamond exports: Less rough, more polished

IMG_8440….as NDTC shares vision
 
Namibia’s Diamond Trading Company says one of its primary targets in the near future is to lower the volumes of rough diamonds exported to other nations to ensure that most exported diamonds leave the country as a finished product ready for international shelves.
 
NDTC CEO Shihaleni Ndjaba this week spoke to this publication during a wide-ranging interview and gave insight into ongoing developments in the local diamond industry.
 
He also spoke of the much-talked Namdia diamond firm, the need to include diamond cutting and polishing in the education stream, threat of synthetic diamonds or lack thereof, the recently-signed 10-year diamond sales agreement between government and De Beers as well as the benefits of skilling locals in the industry.
Almost a decade into the job, Ndjaba still seems passionate when he speaks of the local diamond industry saying “my ideal local diamond industry is one that exports less rough diamonds and more polished ones.”
 
Can you just briefly take us through the mandate of NDTC and its 2016 performance in general?
NDTC is a joint venture company between the government of the Republic of Namibia and De Beers on a 50/50 basis and our main mandate is to sort and value the whole diamond production of Namdeb Holdings which refers to Namdeb land production diamonds and diamonds produced my De Beers Marine for the sea. And then also to distribute the same in line with our sales agreement locally and internationally. I must say last year was quite a good year in terms of demand for our rough diamonds and for our sales.
 
And for our sales we came from a year, the previous year 2015 when demand for our diamonds was very low as result of low prices for polished diamonds so we saw an increase for demand in rough diamonds last year and in terms of sales of rough diamonds to local side holders. We were able to sell over 90 per cent of our sales.
 
Share with us some of NDTC’s targets in 2017?
We want to focus on diamond beneficiation and we hope that the new agreement has made it possible for NDTC to supply more rough diamonds to its clients. NDTC will be served if we have this increased levels of diamonds to supply to our clients and it does not result into the creation of the benefits that the whole beneficiation program is all about- to see increased job and value addition as a result of jobs being created. And we want to see less exporting of rough diamonds being supplied to NDTC site holders for value addition in Namibia and for job creation. We to see less export of that rough, and instead see the export of polished diamonds which is the ideal situation. Therefore we want to engage our ministry and site holders to make sure that we are talking the same language that the diamonds being supplied for beneficiation must be utilized for polishing, value addition and job creation, but not be exported because by doing so you are exporting jobs out of the country. We are not in the business of exporting jobs, we are in the business of creating job in Namibia with the beneficiation diamonds that have been given to the mandate of NDTC to administer. That will be one of our main focuses.
 
Going forward, government signed a 10-year sales agreement with De Beers last year. How has the implementation of that agreement fared?
It has rolled-out very well and I must say it has made it possible for BDTC to offer more rough diamonds to its clients, especially the local clients compared to what was available to our site holders in previous year. The deal has enabled us to sell diamonds to companies that are involved in in diamond cutting locally and it has also created the new sister company (NAMDIA), which is government owned and has been authorised to source its rough diamonds form NDTC in line with the sales agreement. That is a new arrangement because it is a new company and a new client to us in addition to our site holders although of course its function is different from the site holders. The site holders are sourcing their diamonds from NDTC on condition that they utilise those rough diamonds for cutting in Namibia for the purpose of creating employment to local Namibians.
 
What are the sentiments around it, is it a better arrangement compared to the previous one?
It has been welcomed by everybody affected by it. I think it is not necessarily a comparison to the previous because for every round of renegotiation of the agreement both parties try to come up with better terms and better conditions which comes from learning and experience from the previous agreement. I think it should not be expected that each and every agreement should be kind of better because you are also improving on areas because you rea learning from the previous one.
 
Like I said, one of the benefits that came out is that we now have more diamonds to distribute locally and we hope this increase of supply of rough diamonds at the disposal of NDTC to its local clients will also results in the creation of more jobs in the country.
You spoke of NAMDIA which came into existence as a result of the renegotiations, the public feels that NAMDIA is competing with NDTC.
 
What is the difference between the two?
NAMDIA is not competing with NDTC at all. NTC has its own separate mandate and NAMDIA has its own mandate. As I said, NDTC’s mandate is to sort and value the diamonds produced by Namdeb Holdings, a process which leads to the pricing of these diamonds before they are sold. However, NAMDIA does not do that function. Again, NDTC is mandated and is allocated an amount to the local companies which are doing diamond cutting and polishing and NAMDIA does not do that. All diamonds are distributed by NDTC. SO they (NAMDIA) are not at all trading at all any function of NDTC. They only relation is that NDTC is the only company that helps whole rough production of diamonds in Namibia, there is no other company handles diamonds in Namibia, its only NDTC.
 
Therefore the agreement made a provision that NAMDIA should be allowed to acquire rough diamonds the production that NDTC manages Namdeb Holdings. The mandate that they have is their own and it very different from that of NDTC. There is no common line whatsoever
 
What did Namibia lack as a country in the absence of NAMDIA that prompted its creation?
What we lacked was that in terms of international distribution of Namibian diamonds, because when you take the portion out that goes to the cutters (local polishers), the only other line of exporting rough diamonds was De Beers. And De Beers then was distributing worldwide and we lacked a third company which would also sell diamonds to the international market. And NAMDIA has the opportunity to sell their diamonds to the international market in parallel with De Beers.
 
So how close does NDTC and NAMDIA work together?
We work together very close because the sales agreement provides that NAMDIA should source their rough diamonds from NDTC And as I said earlier we are mandated to sell 15 per of the whole production of Namdeb Holdings, thus every now and then they have to approach us so that they can access their supply of diamonds. So that is the main relationship that we have.
Taking the world economy into consideration, as a man on the street, why would I want to buy luxury items under these circumstances? How does NDTC deal with such financial turbulences?
 
A diamond is a diamond for what it is. A diamond is a demand and one that is emotional. As we always say, it is based on love and that is way it is said that a diamond is a friend of a woman or vice-versa. Therefore a diamond is being bought for what it is based on the emotions of the person who is buying it. And therefore if you feel that you have a desire to meet, for which a diamond is being supplied as a product that is what urges you to buy a diamond.
 
Let’s talk about local skills development, how are Namibians progressing, if at all, in the local diamond industry?
I am very satisfied because if we start with NDTC, we do quite a specialized job of valuing the diamonds. When diamonds come from the mines, they come with no value because you can’t take a heap and sell it. You have to categorize them in specified categories which are linked to price point. And then it is a skill to make sure that diamonds are sorted correctly so that you combine the forces like your carats, the weight, the cut and the likely outcome of the cut that will into a finished product, clarity and the colour. The combination of those force makes up the value and the price of diamonds. And then you need a trained eye to sort those diamonds at correct price points and categories.
 
And at NDTC we are 100 per cent Namibian operation meaning over the years we have created the required skills among Namibians to run that operations. My managers are all Namibians and they are managing all this specialised operation and there are those who were running the processes of sorting the diamonds up the point where we are able to sell them. And there are those who are running the operation of selling the diamonds to those external like De Beers and NAMDIA and the local site holders.
 
Now downstream to the site holders, close to 10 years ago when we started the beneficent program most of the staff in the factory were expatriate staff, form Belgium and India but over the years we have replacement of those expatriates with Namibian.
 
Today we have at some of the factories we have Namibians who are in charge planting function of the factory. It is an important function because it enables you to project the outcome of the rough diamond. If your planning goes wrong, you lose value of your diamonds. And today we Namibians who are running the planning which means we have reached a point where skills has been transferred from expatriate staff to local staff, I am very satisfied with that.
 
Part 2 will follow in the next edition



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