See also:
» 21.12.2009 - Bannerman lodges application for Uranium mining in Namibia
» 29.08.2008 - World class uranium deposits discovered in Namibia
» 14.07.2008 - Namibia registers record inflation
» 02.06.2008 - Skills shortage plagues Namibia's mining industry
» 13.06.2007 - French eye Namibian uranium miner
» 31.01.2007 - Namibia deepens partnership with De Beers
» 01.02.2005 - "Iran did not buy uranium from Namibia," govt
» 06.07.2004 - 60,000 diamonds found in 22 days off Namibia

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Economy - Development

Return of diamonds to fuel Namibia economy

afrol News, 16 November - After some declining years and an impression that the diamond age in Namibia's economy were fading out, gems are making a comeback. Last available statistics show that the Namibian gem trade has boomed by 26 percent since mid-2005, and the industry keeps investing in diamond mining.

According to the September 2006 Quarterly Bulletin, recently released by the Bank of Namibia, "The rebounding performance experienced" in the mining sector during the second quarter of 2006 "was highly noticeable." The entire mining sector had expanded by 20.9 percent since the same period last year, with a large increase in diamond, uranium, gold and silver production.

The most notable increase, however, had been in diamond mining. "The diamond output increased remarkably by 26.0 percent on a year-on-year basis. The good performance observed in the diamond output is underpinned by mining in the areas with good diamond resources and the favourable exchange rates," the Bank of Namibia report said.

This new growth in Namibia's diamond sector contrasts the decline in previous years. Only in 2002, the value of Namibia's total diamond mining as part of the gross domestic product (GDP) was over Namibia dollars (N$) 3.4 billion. By 2005, this had dropped to only N$ 2.7 billion.

Diamond mining had been the major economic activity in Namibia since early colonial times and in particular during the South African rule. Many of the best diamond mines in the country thus have seen their heydays and getting hold of new quality gems usually costs large investments. As a result, an increasing part of Namibia's diamonds is mined offshore using unique technology.

The increasing difficulties in getting hand on quality gems are also reflected in the otherwise positive Bank of Namibia statistics. While this year's boom mostly reflected an increased volume as measured by the number of carats exported, there was a slight decrease in the value of diamonds exported. "This is a manifestation of the fact that a host of factors such as the diamond shape, size and colour affect the export value of diamonds," according to the Bank report.

During the second quarter of 2006, Namibian diamond export earnings thus had declined by 1 percent, quarter-on-quarter, to N$ 1.8 billion. The diamond export value, however, rose year-on-year by 59 percent from N$ 1.1 billion.

On a longer term, Bank statistics also show that diamond mining is getting less important to the Namibian economy. While diamond mining contributed with over 10 percent to Namibia's overall GDP only in 2002, this has been dropping to around 7 percent in 2005, while it could increase somewhat this year. Statistics indicate that mining, while still important, is slowly losing out industry and services as the motors of Namibia's economy.

Still, the Namibian government is strongly dependent on diamonds. According to a recent speech by President Hifikepunye Pohamba, diamonds constitute more than one third of the country's export earnings and Namibia's own diamond producer, Namdeb, is the country's by far largest tax payer. The sector thus has a bigger importance to the national treasury than to GDP and President Pohamba sees continued large-scale gem mining as key to achieving the country's long-term development plans.

Also the Namibian diamond industry remains widely optimistic. World market prices for rough and cut diamonds have steadily risen for over a decade as demands only increase, and the last year's slightly negative trend is believed to be only temporary. As specialists believe there to remain very few undiscovered major diamond sites in the world, the industry is willing to invest to make old fields more profitable.

In Namibia, much of the investments are going into the offshore harvesting of diamonds that rivers flushed into the ocean thousands of years ago. According to the latest updates by companies such as Diamond Fields and Bonaparte Diamond Mines, the offshore areas known to be covered with diamonds are getting bigger every day as exploration goes on.

A total of 291 gem quality diamonds weighing 135.92 carats had been recovered during a resource development sampling programme outside Namibia's town of Lüderitz in early November, Diamond Fields reported. The grid-based sampling results had shown "near-continuous diamond mineralisation over a substantial cumulative area of approximately 290,000 square metres." As a result of the technically advanced exploration, the company is by now making a fortune on Namibian diamonds.

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