Cautious optimism for diamonds
The Namibian diamond industry is cautiously optimistic about 2012. Inge Zaamwani-Kamwi, managing director of mining company, Namdeb, said the outlook for the full year can be described as cautious to optimistic given the ongoing Euro zone crisis, although it is difficult to predict what the market is going to look like at this time.
“The biggest sales period for the diamond industry is from end of November through to February. Sales that take place during this period are a critical indicator of what to expect for the year. Looking at industry trends over the years, we can expect positive growth in sales and better than last year overall performance subject to global economic fundamentals especially in the USA and China,” she told the Economist.
The company aims to produce 600,000 carats from its land business this year – more than double of last year’s production, while its sister company, Debmarine will produce close to one million carats bringing the Namdeb Group total production close to one point six million carats.
“We have a number of strategic focus areas, and key amongst these is safety and employees engagement to rebuild confidence and trust back into the business. This is critical to step up performance and improve productivity this year. We will focus on ensuring that the Elizabeth Bay mine in Lüderitz is fully commissioned and start producing at full capacity. We will be commencing with the construction of one new mine towards the end of the first half of this year. This will put millions of dollars into the economy through procurement of construction materials and equipment, which will contribute towards growth in the economy and create jobs during the construction phase,” Zaamwani-Kamwi said.
Last year, the company experienced huge financial losses following a month-long strike. Namdeb lost over N$100 million and as a result, many projects were put on hold.
“Namdeb and it’s shareholders are a N$100 million worse off as a result of the strike. The company could not invest in expansion projects at the rate it would have, had it not been for a number of misfortunes including the strike that it experienced last year. Some of the projects that were to be advanced last year were put on the back burner with resultant opportunity costs for all stakeholders. However, due to good price per carat and mining mix, we were able to claw back some of the losses,” said Zaamwani-Kamwi.
In 2010, Namdeb introduced a five-year plan in a bid to extend the life span of both its offshore and onshore operations from 2020 to 2050. The company also aims to extract 60 million carats worth of diamonds which would extend its life span to 2050 instead of 2014.
The diamond giant would have to invest N$1.4 billion by 2014 and around N$6.7 billion by 2020 to fully optimise land-based mining.
According to Zaamwani-Kamwi, it is too early to say whether the change in ownership in Debeers would have any impact on these expansion programmes.
“It is rather too early to say what the new shareholders would do. So far we have been told to carry on with managing the business in the most effective way as we have in the past. I am sure once all formalities are completed Anglo will brief all the stakeholders what changes if any it will like to see,” she said.