Diamond industry yet to benefit from new Govt/De Beers deal

> Timo Shihepo

Windhoek – The much talked about N$550 million diamond deal between the Namibian Government and De Beers is still not benefiting the local industry as the deal is yet to come into effect despite several meetings and public announcements from both parties, The Southern Times has established.

The deal was proposed by government and was aimed at increasing the local supply of rough diamonds to the cutting and polishing industry from 10 percent to between 25 percent and 30 percent, which would also see Namibia profiting N$550 million through local owned companies.

The deal is however yet to come into effect and the delay is thought to be attributed to De Beers’ change of stance at the eleventh hour that the local percentage be increased from 10 percent to 15 percent only, rather than between 25 percent and 30 percent, something that government officials are not keen to accept.

Earlier in June this year in an interview Namibia’s Minister of Mines and Energy, Obeth Kandjoze who described the deal as a success at that time said the signing of the agreement was to follow shortly.

However, Chief Public Relations Officer at the Ministry of Mines and Energy, Ten Hasheela confirmed that the deal is not effective yet and said “I will unfortunately not be able to respond to your (other) questions due to the fact that the said agreement has not been signed yet, the media will be informed accordingly once the process has been finalized.”

The Southern Times was however reliably informed that De Beer’s change of heart to 15% will not affect the delivery entitlement clause – which was removed from the new agreement to prevent  De Beers from controlling the Namibian market by setting the price, choosing when to buy and not when to buy.

Such agreement contributed enormously to the losses of Namdeb Diamond Corporation – which is 50 percent owned by the government as they were forced to stock pile products when the world market wasn’t buying any particular product.

That will however be a thing of the past in the new agreement.

“Back then if the market was bad and De Beers didn’t buy, Namdeb would be forced to stock pile at its own cost that product until the market really gets better that then forced Namdeb to run losses waiting for the market to improve while De Beers doesn’t take any risks and when they think that the market has improved they come back and they can pay whatever the price is but it’s just means that Namibia could do nothing.

“You mine and stock pile at your own risk without the buyer (De Beers) which sets the price and then it will come back and decide whether it can buy for that price while you are running a risk.

“Now the delivery entitlement clause is now out of the new agreement and it just means that De Beers will not be setting the prices as was per the previous clause.

“That clause will not oblige Namibia to do business along those lines,” Kandjoze said earlier in June.

If the government is then forced to sign an agreement worth only 10% rather than between 25 percent to 30 percent it will just prolong the view that Southern African Development Community (SADC) countries are being taken for a ride when it comes to their minerals especially diamonds.

If the government agrees, this will also go against the SADC protocol on mining which states that they shall promote economic and social development integration of the SADC economies with a view to achieving competitiveness and increasing the local market share in international markets.

Furthermore the protocol says the SADC countries should be determined to ensure, through co-operation and collaboration, to develop the region’s abundant mineral resources to improve the living standards of people throughout the SADC region. 

September 2015
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