Diamonds Sparkle: Nam gem exports rake in R11.7b
Windhoek ‑ Namibia's diamonds export earnings surged 41.8 percent to R11.7 billion in 2013 buoyed by an increase in exported volumes and a depreciating local currency, the central bank says its annual report.
Shipments rose to 1.8 million carats in 2013, as gems continue to stamp authority as the country's key export earner as well as major contributor to the gross domestic product (GDP).
The share of diamond export earnings in the country's total earnings rose to 26.1 percent in 2013 from 23 percent the previous year. Namibia's minerals sector contributed 40 percent of total export receipts last year, the central bank says.
“Diamond export earnings rose substantially due to increased export volumes and the impact of the depreciation of the local currency against its major trading currencies,” the central bank says.
Diamonds mining output rose 5.7 percent to 1.7 million carats due to improved operations, the BoN says.
“The past two years saw production gains with increased activities in onshore and offshore mining along the re-opening of an old mine and the acquisition of an offshore mining vessel in 2012. Favourable labour relations and the absence of any major technical challenges also contributed to the increase in diamond production in 2013,” the bank says.
Diamond mining contributed R2.5 billion in royalties, taxes and dividends to state revenue fund in 2013, Namibia's Mines and Energy Minister, Isak Katali, told the National Assembly recently.
“We expect similar levels of contributions to the state from this strategic resource in 2014,” Minister Katali said.
Namdeb Holdings, which is equally owned by the Namibian government and Anglo American Plc, separately paid R74 million in dividends while Namibia Diamond Trading Company paid R120 million in dividends to the state “as a result of local sales of diamonds to local cutting and polishing factories”, Minister Katali said.
Diamond miners in Namibia pay a 55 percent tax rate on profits and a 10 percent royalty on turnover.
Namibia's diamond mining sector withers market turbulence due to the quality of its marine gems, which are scoured from the depth of the Atlantic Ocean, that fetch the highest prices on the market because of their high quality, purity and resistance to cracking.
Gem Quality Stones
Namibia's diamonds, which are mined from the shores of the Atlantic Ocean, are believed to have been carried by the Orange River flows centuries ago, and washed into the sea.
More than a century ago, during Namibia's Germany colonial occupation, rich diamonds were basically being “picked from the sand” across the Atlantic shorelines and valley floors.
After more than a century of mining, which has witnessed the dwindling of land deposits, Namibia's diamond mining is becoming concentrated in the Atlantic Ocean.
The diamonds mined from the sea floor rank globally as the highest gem quality stones, which are fetching prices, on average, of between US$450 and US$700 per carat on the market because they are “pure carbon, spotless and 98 percent gem quality”, Namibia's Diamonds Commissioner, Kennedy Hamutenya said in an interview.
Namibia, the world's largest producer of marine gems, would continue to leverage the quality of its gems over quantity, Hamutenya said.
By comparison, diamonds mined in Botswana fetch an average price of US$150 per carat, while gems from Angola fetch below (on average) US$100 and Zimbabwe, averages below US$50, Hamutenya said.
“Namibia's diamonds fetch the highest prices because they are of high quality, pure carbon, spotless and they don't disintegrate, 98 percent of Namibia's stones are gem quality,” Hamutenya said.
While quantity matters for some producers, Namibia is not worried much about the quantity of diamonds produced, but the quality.
“What we don't have in quantity is made up in quality,” Hamutenya said.
Namibia's Atlantic coastal area holds an estimated 80 million carats, the richest known marine diamond deposits in the world, believed to have been carried by the flow of the Orange River from central South Africa more than a century ago.
The marine diamond deposits could be mined for up to 2050 and beyond, depending on technological advances which enables miners to continue scour the depth of the ocean for gems, Hamutenya said.
Almost 1 million carats of Namdeb's output comes from its sea-based operations.
“We don't do a lot of quantity like Botswana, for example. Approximately one million carats of Namibian diamonds could be equivalent, in value to 13 million carats of South African diamonds, Hamutenya said.
“There is so much diamonds in the ocean that could last up to 2050 or beyond. Currently, there are indications that Namdeb wants to extend its mining licence by another 25 years, and the only explanation for this could be they have discovered significant deposits,” Hamutenya said.
Meanwhile, the central bank also says that export volumes for uranium, which is used as nuclear fuel, rose 9.9 percent from 5 327 tonnes exported in 2012.
“Uranium export receipts increased significantly in 2013, as a result of the higher export volumes and the impact from a weak local currency, notwithstanding further declines in international uranium prices,” the central bank says.
This is despite the fact that uranium production declined by 2.4 percent to 5 382 tonnes last year due to limited water.