Gem sales: De Beers, Namibia move forward on key issues

THE two shareholders in Namibia’s biggest company, Namdeb Diamond Corporation, have reached agreement on principle issues and will make a national announcement when everything is finalised.

This was revealed by Namdeb’s Managing Director, Inge Zaamwani, at a press conference held at the company’s headquarters in Windhoek yesterday. “We have reached conclusions on some principle issues,” she said.Zaamwani could not give specifics of what stage the talks had reached or what issues were at stake, however, saying she was not privy to the continuing meetings.The company’s two partners, Government and mining giant De Beers, have been in protracted negotiations on the renewal of a five-year sales contract, which early this year reportedly hit a snag as the parties were reportedly struggling to agree on certain provisions in the contract.Early last month, when announcing De Beers’ interim results in Johannesburg, De Beers Managing Director Gareth Penny said the talks between Namibia and De Beers were going well.The country has been waiting anxiously for the result of the negotiations between the two parties, which have been meeting since November last year.De Beers has since finalised similar negotiations with other regional gem producers, Botswana and South Africa, where the company also has stakes in the diamond industry.At the briefing, Namdeb’s Group Financial Manager, Andrew Schanknecht, also announced the company’s interim results ending June 2006.He said Namdeb had seen an increase of 22 per cent in carats sold in the six months ending June 2006, which resulted in diamond sales revenue going up to N$2,6 billion.Although the sales went up compared to the corresponding period last year, the average stone size went down by seven per cent.Cost of sales went up to N$1,6 billion from N$1,2 billion in the same period last year, while taxes accrued for the State amounted to N$400 million – which is similar to that of last year.Zaamwani once again hammered on the company’s drive to produce 10 million carats and generate N$43 billion between 2006 and 2010.She said even though the task was a challenge for the company, shareholders had called for a feasibility study in 2003 which was conducted before embarking on such a path.”The company continues to invest substantial capital on an annual basis in order to find new reserves and discover ways of economically mining and treating previously uneconomic reserves, thereby extending the life of the land operations,” she said.Zaamwani said the company was focusing more on marine operations because land resources were fast depleting, adding that around N$800 million had so far been invested in capital projects.These included a new mine situated between Luederitz and Oranjemund and also a marine dredging project.Analysts have said that marine mining could be the wave of the future.The new mine set up at a cost of N$220 million has created employment for 100 people, said Zaamwani, and is expected to boost the company’s total production by 10 per cent when it goes into full operation around 2008.The company has also invested in a dredging vessel, which is due to arrive in the country next week from Malaysia, where it was constructed and successfully tested.Zaamwani also said synthetic diamonds continued to pose a threat to natural diamond producers.”We have reached conclusions on some principle issues,” she said.Zaamwani could not give specifics of what stage the talks had reached or what issues were at stake, however, saying she was not privy to the continuing meetings.The company’s two partners, Government and mining giant De Beers, have been in protracted negotiations on the renewal of a five-year sales contract, which early this year reportedly hit a snag as the parties were reportedly struggling to agree on certain provisions in the contract.Early last month, when announcing De Beers’ interim results in Johannesburg, De Beers Managing Director Gareth Penny said the talks between Namibia and De Beers were going well. The country has been waiting anxiously for the result of the negotiations between the two parties, which have been meeting since November last year.De Beers has since finalised similar negotiations with other regional gem producers, Botswana and South Africa, where the company also has stakes in the diamond industry.At the briefing, Namdeb’s Group Financial Manager, Andrew Schanknecht, also announced the company’s interim results ending June 2006.He said Namdeb had seen an increase of 22 per cent in carats sold in the six months ending June 2006, which resulted in diamond sales revenue going up to N$2,6 billion.Although the sales went up compared to the corresponding period last year, the average stone size went down by seven per cent.Cost of sales went up to N$1,6 billion from N$1,2 billion in the same period last year, while taxes accrued for the State amounted to N$400 million – which is similar to that of last year.Zaamwani once again hammered on the company’s drive to produce 10 million carats and generate N$43 billion between 2006 and 2010.She said even though the task was a challenge for the company, shareholders had called for a feasibility study in 2003 which was conducted before embarking on such a path.”The company continues to invest substantial capital on an annual basis in order to find new reserves and discover ways of economically mining and treating previously uneconomic reserves, thereby extending the life of the land operations,” she said.Zaamwani said the company was focusing more on marine operations because land resources were fast depleting, adding that around N$800 million had so far been invested in capital projects.These included a new mine situated between Luederitz and Oranjemund and also a marine dredging project.Analysts have said that marine mining could be the wave of the future.The new mine set up at a cost of N$220 million has created employment for 100 people, said Zaamwani, and is expected to boost the company’s total production by 10 per cent when it goes into full operation around 2008.The company has also invested in a dredging vessel, which is due to arrive in the country next week from Malaysia, where it was constructed and successfully tested.Zaamwani also said synthetic diamonds continued to pose a threat to natural diamond producers.