Namdeb to resume production, diamond demand recovers

NAMDEB remains on track to end its production holiday on June 30 as diamond demand begins to show ‘encouraging’ signs.
Daniel Kali of DeBeers says diamond demand has started to pick up slightly, though levels continue to remain significantly low.

‘We are beginning to see some encouraging demand for some rough diamonds. However, demand still remains way below pre-crisis levels,’ he told The Namibian on Wednesday.Following the onset of the financial crisis and poor trading conditions for the fourth quarter of 2008 and the first quarter of 2009, DeBeers had to undergo drastic cost-saving measures that included letting go of thousands of staff, reducing shifts, and cutting or halting production to meet demand levels.Overall, DeBeers production almost came to a halt with a 90,8 per cent plunge in production in the first quarter of this year, compared to the December 2008 quarter.In Namibia this entailed Namdeb imposing a three-month production holiday starting in April, following massive production cuts started in November, and coupled with a voluntary separation exercise that saw the mining giant shed 578 staff by the end of March.However, despite a slight rise in demand for rough diamonds, De Beers isn’t jumping for joy just yet.’One of the very difficult aspects of this global economic crisis is that it continues to be fluid and unpredictable, and clearly an important aspect in all of this is consumer confidence, of which we are beginning to see a significant improvement. All in all, we are cautiously optimistic about the prospects for a recovery from this crisis,’ says Kali.He adds that production will remain in line with demand, signalling that the end of Namdeb’s production holiday will not necessarily mean a return to full production. Dispelling speculation that the production holiday will be extended another four months, Hilifa Mbako, Manager for Corporate Communications and External Affairs at Namdeb, said plans for workers to return to duty on July 1 remain on course.’The production holiday has definitely not been extended, and there has been no discussion about extending it,’ he said.Production at mines in Botswana resumed last month already, after a 50-day production halt.Mbako also disputed claims that workers had not received their voluntary separation packages, saying that ‘all packages have been paid out, and everything is on track regarding the production holiday’.He added that once workers returned on July 1, they would undergo ‘a rehabilitation and retraining process’ for three weeks to re-acquaint themselves with safety procedures at the mines before starting production.Second quarter production for DeBeers is expected to pick up, with production having re-commenced in Botswana, which usually accounts for 65 per cent of DeBeers’ production, but levels will nonetheless remain considerably low.nangula@namibian.com.na