Namibia is expected to reap huge benefits from a rise in international diamond prices, Mines and Energy minister Tom Alweendo has said.
This was after global diamond giant, De Beers, in its first sale of the year in Botswana earlier this month raised the price of larger stones by about 5%, while some smaller rough diamonds saw price hikes of as much as 20%.
“Obviously it’s good for us. Remember we also get the royalty on the selling price, that also increases our take for the royalties. The other way we will also benefit from this is in terms of the government being a 50% shareholder in both Namdeb and Debmarine. This will translate into more profitability and if the company is making more profits, then they will be dividend, we can also hopefully get better dividends than if the price was the same,” the Mines minister told The Brief.
“Overall, it’s good for the country. It will probably also show up in our GDP figures. The contribution to GDP particularly from mining, diamonds, will be more significant than it would have been had the price remained the same as last year. Although I know GDP is the best way to assess the health of the economy.”
Namibia charges a royalty fee of 10% on rough diamonds and a 55% corporate tax on diamond mining.
Alweendo attributed the increase in global prices of gems to a mismatch between diamond production and supply.
“Diamond production has either been static or decreasing and because of that somehow demand bounced back last year. I think for the last 8 months or so, demand for diamonds has really bounced back and because of that, where production cannot meet demand, the price will increase. So the price of diamonds has gone up, but it’s not because suddenly De Beers has increased it, but anyone who is selling diamonds now, they are getting better prices simply because of the production which doesn’t always match the demand,” he said.
“Even Alrosa, they are getting better prices for their diamonds now compared to what they used to get in 2020 or half of 2021 last year.”
De Beers reported rough diamond sales of US$4.82 billion in 2021, a 41% uptick from 2020’s US$2.81 billion.
In 2021, De Beers’ per carat price rose 13% to US$135 with an average unit cost of US$59; that’s compared to 2020’s US$119 with an average unit price of US$62, with the average price for rough diamonds across the sector up 23% for the year.
De Beers in Namibia has land operations through Namdeb and marine operations through Debmarine.
According to De Beers global production figures released last week, Namibia’s diamond production marginally increased to 1.467 million carats last year, compared to 1.448 million carats produced in 2020.
In the 12 months to December 2021, Debmarine produced the bulk of the country’s diamonds, churning out 1.137 million carats from its marine diamond operations, marginally up from the 2020 production figure of 1.125 million.
Namdeb’s diamond production increased by 2% in 2021 to close the year at 0.330 million carats.
This is against a 29% increase in De Beers total diamond production of 32.276 million carats for 2021, compared to 25.102 million in 2020.
