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Photo courtesy of Namdeb.

SAVED ALMOST AT THE LAST MINUTE, DEAL WITH GOVERNMENT GRANTS NAMIBIAN MINES ANOTHER 20 YEARS OF LIFE

 

Some had believed that the end of Namibia’s long diamond history was in sight, but to paraphrase Mark Twain reports of its death were somewhat exaggerated. After lengthy negotiations the Namdeb Diamond Corporation, the equally-held joint venture between the De Beers Group and the government of Namibia it was announced that a new long-term business plan had been approved, which the company says will extend the current life-of-mine of its land-based operations by as much as two more decades, through to 2042.

The previous business plan had envisaged that the land-based Namdeb operations would end their life in a little more than 12 months’ time, at the end of 2022. Because of the fiscal environment, the continued life of operation was considered unsustainable, it had been reported.

But negotiations between Namdeb’s management team and the government of Namibia, which was keen to avoid a loss of export income, not to mention jobs, bore fruit.  Essentially the government reduced the royalties Namdeb will pay from 2021 to 2025 from 10 percent of revenue to 5 percent.

According to commentators, the reduction in the royalty burden makes Namdeb’s land-based operations economically viable moving forward. The Republic of Namibia is expected to reap an additional 40 billion Namibian dollars, translating into U.S. $2.7 billion, through taxes, dividends and the still existing royalties, as well as the creation of 600 additional jobs, ongoing benefits for community partners and some 8 million carats in terms of diamond production.

SAFEGUARDING THE MINING COMPANY’S FUTURE

“Namdeb, a shining example of partnership, has a proud and unique place in Namibia’s economic history,” said says Bruce Cleaver , De Beers CEO, greeting the news. “This new business plan, forged by Namdeb management and enabled by the willingness of government to find a solution in the best interest of Namibia, means that Namdeb’s future is now secure and the company is positioned to continue making a significant contribution to the Namibian economy, the socioeconomic development of the Oranjemund community and the lives of Namdeb employees.”

“Government understood the fundamental impact of what the Namdeb mine closure at the end of 2022 would have had on Namibia,” stated the Namibian Minister of Mines and Energy.

“Therefore, it was imperative to safeguard this operation for the benefit of sustaining the life-of-mine for both the national economy as well as preserving employment for our people and the livelihoods of families that depend on it.”

A land-based diamond-mining operation of Namdeb in Nambia, extracting diamonds from the Atlantic beaches. (Photo courtesy of Namdeb)

“After more than a century of production, these operations were approaching the end of their life, but the creation of this new business plan means we can continue to deliver for Namibia for many years into the future,” the minister added.

“This is great news for the hardworking women and men of Namdeb, as well as for all our community partners who we are proud to have worked with over the years,” added Namdeb CEO Riaan Burger. “We now look forward to starting a new chapter in Namdeb’s proud history.”

Most of Namdeb’s deposits are alluvial, washed down by river from distant inland sources over many millennia. (Photo courtesy of Namdeb)

DIAMONDS ON THE BEACH

Namibia has a long diamond history. They have been mined in the country since 1908, it was a German colony, following the discovery of a stone by when railway worker Zacharias Lewala, which would change the course of history. Shortly after he handed it to his supervisor, August Stauch, a diamond rush was underway in desert sands near Luderitz.

The deposits were alluvial, and were believed to have been washed down South Africa’s inland, from where the giant Orange River flows into the Atlantic Ocean. It was said that deposits were so rich that Stauch and others could often simply pick up diamonds from the valley floors.

Colonial Germany managed to mine 7 million carats by 1914 and the outbreak of World War I, during which it lost its colony to South Africa, which then was part of the British Empire.

After the war, various colonial mining companies merged into the Consolidated Diamond Mines of South West Africa, which were renamed CDM. It was about that the time the diamondiferous raised beaches near Oranjemund, the town at the mouth of Orange River, were discovered.

Over the next 80 years they would yield some 65 million carats of often high quality diamonds.

In the 1990s CDM was restructured into Namdeb. Its seven mineral licences cover 16,000 square kilometers of land.

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