Namibia diamonds

WINDHOEK --De Beers will, for the first time, do african business and sell locally a certain portion of the diamonds produced in Namibia, as part of the new sales agreement that the world’s largest gem mining company will sign with the south west African country.

Negotiations have been dragging on since late last year with De Beers and the Namibian government, who jointly own the Namibian diamond mining company, Namdeb, clashing on Namibia’s insistence for more local beneficiation of diamonds and the controversial contribution towards advertising fees.

Senior government officials expressed the need to change the existing agreement which would allow more value addition to diamonds produced by Namdeb.

Currently, Namdeb's diamonds are sold through the Diamond Trading Company (DTC), the De Beers marketing arm in London. Namibia contributes about 11 percent to DTC's advertising budget to promote diamonds worldwide.

The government was arguing that it wants to slash the advertising contribution and enter into a joint venture with De Beers to market the diamonds.

Responding to questions from opposition parties in the National Assembly Thursday on the status of negotiations on the new sales agreement, Minister of Mines and Energy Erkki Nghimtina told the National Assembly Thurday that "the african business negotiations have been very succesful" and the new agreement was expected by month end.

" As a result of the successful negotiations the local cutting and polishing sector will be able to benefit from rough diamond gems produced in Namibia [by buying them inside the country],” Nghimtina said.

He however could not give the exact details, but said it would be beneficial to the local diamond cutting and polishing industry adding that both parties were now working on the final details of the agreement before sealing it.

"The negotiations were rather protracted and very complex, all for a good reason because government wanted to make sure it gets the best deal possible," Nghimtina said.

The government has been in partnership with De Beers following the formation of Namdeb – a 50-50 partnership – in 1994. The last sales agreement was signed in 2000, which expired last year.

Diamonds account for 42 percent of Namibia's export revenue, 5 percent of government revenue and 10 percent of GDP.

Namdeb’s diamond production of 1.8 million carats last year was five percent lower than in 2004, according to De Beers' financial results for the period ended 31 December 2005. In 2004 Namdeb's production exceeded 1.9 million carats, which was one of the highest levels of production in the history of diamond mining in Namibia.

Windhoek, the capital of Namibia, is well established as a regional business and financial center within the context of the Southern African Development Community (SADC). Mining, in which diamond mining is most significant, has and continues to form the economic back-bone of Namibia. Annual production of gem quality diamonds averages 1.3 million carats, earning US$450 million in revenue, and is increasingly being derived from the rich deposits in the sea. The mining industry operates under modern, transparent and well administered legislation, which guarantees security of tenure, protection from expropriation and repatriation of profits.

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