Namibia rakes in R4 billion from De Beers

By Timo Shihepo

WINDHOEK – The Namibian Government raked in R4 billion from De Beers in 2016, The Southern Times has learnt.

Information seen by this paper shows that the government made R2.2 billion in corporate tax, R1.1 billion in royalties and R700 million in dividends from De Beers last year.

The money will rise to R6 billion when R2 billion from Namib Desert Diamonds (Namdia) is added to the equation. Namdia is a state-owned company responsible for selling local diamonds obtained from Namdeb worth around R2 billion per year.

This means that government will get a significant portion of the R11 billion that De Beers made from selling 1.5 million carats of Namibia’s precious stones last year.

De Beers and the government jointly own Namdeb in equal shares. Namdeb diamond operations lie along the south-west coast of Namibia with the main land-based operations at Oranjemund and satellite mines near Lüderitz and along the Orange River.

Information contained in De Beers’ preliminary results, however, states that production at Namdeb Holdings decreased by 11 percent to 1.5 million carats compared to 1.8 million carats in 2015.

De Beer’s total revenue nevertheless increased by 30 percent to US$6.1 billion (R80 billion) from US$4.7 billion (R61.3 billion) in 2015. The group says this was driven by higher rough diamond sales, which increased by 37 percent to US$5.6 billion (R73 billion).

Meanwhile, the De Beers Group of Companies made an astonishing R61 billion from selling 26.3 million carats of diamonds from southern African last year. De Beers has operations in Botswana, Namibia and South Africa.

The world’s leading diamond producer made R43 billion from selling 20.3 million carats in Botswana, a decrease from R50 billion they made in 2015.

The company said Debswana maintained production at close to the previous year’s levels, with output of 20.3 million carats (2015: 20.4 million carats).

In South Africa, De Beers made R7 billion from selling 4.2 million carats also a decrease from R8 billion they made in 2015.

“In South Africa, production declined by 9 percent to 4.2 million carats (2015: 4.7 million carats), mainly due to the early completion of the sale of Kimberley Mines in January 2016, partly offset by an increase of 12 percent at Venetia owing to the processing of higher grades,” the company said in its preliminary financial result for 2016 released in late February.

The group’s profit from Namibian diamonds also decreased to R11 billion they made in 2016 from the R13 billion they made in 2015.

De Beers also has operations in Canada and they made R4 billion from 1 million carats a decrease from R7 billion they made in 2015.

In a statement, the group said owing to continuing depressed markets in key industrial sectors (principally oil and gas), element six, the industrial diamonds business, experienced a challenging year.

It also said that other factors include the weak China economic performance as well the low commodity prices experienced throughout last year.

“The reduction in contribution arising from lower sales has been largely offset through a comprehensive cost-reduction programme.”

March 2017
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