afrol News, 31 January - The government of Namibia has entered into a new agreement with diamond monopolist De Beers over Namibian diamond sales until 2013, with conditions significantly improving for Namibia each time they have been renegotiated since colonial times. Partly state-owned Namdeb will get a larger share of the downstream industry and diamond trade through the deal.

The government of Namibia and De Beers in a press release yesterday announced an agreement that secures the sale of Namibia's diamonds through De Beers' Diamond Trading Company (DTC) until 2013. The agreement was said to "cement one of the most enduring and important partnerships in the global diamond industry for years to come."

For the first time, this agreement will extend from diamond mining into diamond marketing with the establishment of a 50:50 joint venture - Namibia Diamond Trading Company (NDTC) - responsible for the valuing, sorting, selling and marketing of Namdeb's diamond production. Also Namdeb since 1994 is owned in equal shares by the government of Namibia and De Beers, after having been a De Beers subsidiary since the 1920s.

The new agreement also outlines the development of a local downstream diamond industry in Namibia, which aims at giving Namibians a greater opportunity to raise revenues and create employment from their diamonds, rather than only exporting the raw gems through De Beers' trade company. This was seen as the main novelty in Namibia's new 2007-13 agreement with De Beers.

"To this end, NDTC will sell rough diamonds to local cutting and polishing factories as well as export to DTC International," the statement said. "It is envisaged that NDTC will be the primary vehicle for the growth of the diamond manufacturing industry in Namibia. Working together with Namibian-based diamond manufacturers, NDTC will also support local marketing initiatives."

According to De Beers, the new agreement will ensure that up to N$ 2 billion (US$ 300 million) worth of diamonds will be made available locally by 2009; representing close to 5 percent of Namibia's GDP. It is hoped that the growing numbers of tourists to Namibia will find local diamonds a good souvenir.

Delivering the keynote address at the occasion, Namibia's Minister of Mines and Energy, Erkki Nghimtina, said: "With the signing of this agreement today we have further deepened our partnership with De Beers to ensure that diamonds contribute even further to the economic success of Namibia."

Also speaking at the signing ceremony Nicky Oppenheimer, Chairman of De Beers, said "Today's agreement is further testimony to the strength of our 13 year partnership, and a demonstration of De Beers' commitment to working together with government to ensure that the country's most valuable natural resource has been turned into sustainable wealth that touches the lives of all Namibians."

According to the latest government figures, diamonds still account for more than 40 percent of Namibia's export revenue, 7 percent of the government revenue and approximately 10 percent of the country's GDP. Namibia produces approximately N$ 5 billion (US$ 700 million) worth of diamonds per year, but production has been declining for several years.

With almost 3,200 employees, Namdeb is Namibia's largest employer. According to the statement, "Namdeb contributes approximately N$ 2 million (US$ 300,000) in corporate social development projects annually in Namibia, principally in the areas of education, small business, community development and health, particularly in HIV/Aids prevention."

De Beers and its Namibian subsidiary have not always been known for corporate responsibility, however. Only in June last year, a report released by South Africa's Anti-Corruption Forum revealed that De Beers had been evading tax on the export of Namibian diamonds when the country was occupied by South Africa. De Beers has also been accused of deliberately over-mining its Namibian prospects shortly before independence, leading to a drop in production shortly after.

Since the early 1990s, however, De Beers has managed to maintain ever-improving relations with the Windhoek government. In 1994, its wholly owned subsidiary Consolidated Diamond Mines (CDM) was turned in to a 50:50 joint venture with the Namibian state and renamed Namdeb. Namibian authorities since then have managed to improve conditions for workers and revenue sharing in subsequent deals with De Beers.

By staff writer

© afrol News

Related pages and feature

Current afrol News Top Stories