Marine diamond sector braces for leadership in Namibian production

De Beers Marine Namibia (DBMN) is gearing to take the leadership position in Namibia’s diamond production as the country’s land reserves enter their twilight years.

Windhoek - 

De Beers Marine Namibia (DBMN), a company owned by Namdeb (30 percent) and diamond mining giant De Beers (70 percent),  has scored a first in its seven-year history. It recovered 1.018 million diamond carats from the Atlantic Ocean off Namibia's Coast in 2006, as indications point to a declining land reserve base.

The Namibian government, also a major player in the diamond mining sector through Namdeb - in a 50-50 partnership with De Beers, is however aware of the dwindling land diamond reserves and is calling on "our efforts and resources" to be channelled towards marine diamond resources "considered to be the future of our diamond industry", said Erkki Nghimtina, Minister of Mines and Energy, Monday.

"De Beers Marine Namibia has been leading the way in this process [of shifting to marine diamond resources], and it has managed to increase its production from a mere 506,000 carats in 2002 to over 1 million in 2006," Nghimtina told a celebration to mark the company's milestone.

The government is already talking with De Beers to see how its stake in DBMN could be increased from the present 30 percent, DBMN's chairman Rob Smart also said Monday.

Smart however cautioned Namibia about expectations from marine mining due to high costs and little knowledge of the ocean floor.

"Recent estimates put the purchase of a new marine vessel at approximately N$3 billion (US$404 million), this represents more than five percent of Namibia's GDP, and it's an astronomical figure. Much as we want to think we do, we actually know very little about the ocean floor," Smart said.

He added, "But Namdeb can still have a sparkling future if we invest correctly, get the right people and have favourable exchange rates."

Namdeb was the first to voice concern on the dwindling resources in September last year. Likening mines to humans that also go through the ageing process, Inge Zamwani, Namdeb's managing director was quoted by Mineweb last year as saying that by 2009, marine diamond mining activities would have bypassed land mining.

At that time marine activities had recovered 537,000 carats, while land based operations had produced 544,000.

Namdeb noted that the stone size was also decreasing with the average carat per stone size for 2006 having been 0.43 down from 0.46 in 2005.

Inge called for more investment in more in activities to extend the life of Namdeb's land based mining operations. She said Namdeb would pump in N$900 million (US$121 million) in two years to ensure the company's future sustainability.

The diamond mining sector represents up to 10 percent of Namibia's Gross Domestic Product and 40 percent of the country's export earnings. The sector employs close to 5,000 people and is considered the largest employer after the government.

The marine diamond mining sector has since been identified as the future of the industry in Namibia and DBMN says it will continuously invest in new technologies to improve its efficiency - to make up for the shortfall that would be created once land based resources are depleted.

DBMN operates five production vessels, four of which use the drill-ship technology while the fifth operates on crawler technology.

DBMN says its contribution to the Namibian economy has been significant. According to managing director Otto Shikongo, in 2006 revenue from its diamonds exceeded N$2.6 billion from which it paid royalties of over N$260 million to the government.

DBMN's contribution to Namdeb's profits was about N$700 million and the company spent over N$350 million on training and development, including N$23 million that was handed out as bursaries for university students.

Marine diamond mining in the country dates back to 1957 when Marine Diamond Corporation (MDC) began exploration off Lüderitz in south eastern Namibia.

MDC was later bought by De Beers, following which De Beers Marine South Africa was formed in 1983. Its first production was in 1990, at 29,000 carats.

Meanwhile, West Perth-based Bonaparte Diamond Mines Ltd has sold the first parcel of diamonds recovered from its project off the coast of Namibia, reaping over US$384,000 from the sale.

The diamond miner sold 1,343 carats, including a 1.78 carat fancy pink diamond for US$33,098 in Belgium last week at an average price of US$330 per carat.

Bonaparte is mining the Diaz Prospect 1 off the coast of Namibia with Canadian-partner Diamond Fields International Ltd.

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