Local diamond value-adding still disappoints
Based on export data from the Office of the Diamond Commissioner, only about 20% of the total beneficiation sales made by the Namibia Diamond Trading Company (NDTC) during 2016, was processed locally.
The Minister of Mines and Energy, Hon Obeth Kandjoze expressed disappointment when the Department of Diamond Affairs declared that a significant proportion of the rough diamonds sold by NDTC to its customers in 2016 has been exported rough instead of being cut and polished in Namibia.
Despite the NDTC noting improved conditions in 2016, the ministry still requested the company to come up with a methodology and approach that takes into consideration each respective sightholder’s rough exports when determining the level of rough diamond allocation for the 2017/2018 sales period.
Kandjoze met this week in Windhoek at the Hilton Hotel with all the relevant stakeholders in the diamond industry to discuss challenges.
“The Ministry of Mines and Energy together with NDTC see you as key catalysts and enablers of downstream diamond beneficiation industry.” Kandjoze said, adding that the main aim of the meet up was to open dialogue and find a workable solution to create a conducive environment for sustainable downstream local value-adding.
Namibia and De Beers signed the Diamond Sorting, Valuing, Sales and Marketing Agreement in May 2016 with one of the key outcomes the increase of the Local Offer Threshold to a price-indexed annual amount of US$430 million.
NDTC introduced a minimum supply level of US$15 million to ensure all Namibian polishing factories operate at a sustainable output. Each sightholder, however, still has the responsibility to maintain or increase the annual allocation for NDTC.
“I want to make it clear that NDTC will not continue to allocate at minimum supply levels to those sightholders that either through non-purchases or significant export levels receive an allocation that is below the minimum supply levels” Kandjoze said.
In addition to the increased Local Offer Threshold, the local diamond cutting and polishing industry has seen NDTC offering all the +10.8cts including Exceptionals to its customers in Namibia.
“It is the Namibian government’s expectation that the changes are anticipated to have a significantly positive impact on the growth and long-term sustainability of the Namibian cutting and polishing industry” Kandjoze said adding that it is for this reason negotiations between the government and De Beers took the better part of two and a half years.
“What this effectively means is that the government would like to see that an increased proportion of NDTC’s supply goes to those sightholders that continue to dedicate a larger proportion of their purchases from NDTC to their beneficiation activities in Namibia” Kandjoze said warning that the ministry will continue monitoring the downstream value adding of local diamonds.
The Office of the Diamond Commissioner over the last few months has been working closely with NDTC to strengthen their ability to measure and to monitor rough exports accurately.