Cautious hope for diamond beneficiation

‘CAUTIOUS OPTIMISM’ has become the new catch-phrase in the diamond industry as signs of a recovery begin to show, and this phrase is also being applied to the process established to ensure that Namibia fully benefits from its own diamonds.

Beneficiation – an initiative to increase the local benefit of diamonds to the Namibian economy by creating a downstream industry (e.g. cutting and polishing factories) was started in 2007 with the creation of the Namibia Diamond Trading Company (NDTC). The NDTC, a 50:50 joint venture between the Government and De Beers, is the sales arm of the national diamond producing company, Namdeb, and ensures that up to 10 per cent of Namdeb rough diamonds is availed to local diamond companies.Asked about how Namibia’s beneficiation process has been affected, NDTC Chief Executive Officer, Shihaleni Ndjaba, told The Namibian that ‘As with nearly every industry around the world, the Namibian diamond industry and beneficiation within Namibia has been impacted by the global economic downturn.’He added that demand from the Namibian sightholders had dwindled, and expressing the industrial ‘caution’ characterising improving demand, noted that: ‘Demand from NDTC Sightholders declined in the latter part of 2008 and the early part of 2009 in line with demand across the industry as a whole. There has, however, been an improved level of demand for rough diamonds over the last couple of months and we are cautiously optimistic that this will continue.’Ndjaba says that despite the negative impact of the economic downturn, ‘NDTC remains fully committed to diamond beneficiation for the long term and this commitment continues to define everything we do at NDTC.’But the caution is understandable, given the scathing that the crisis imposed on diamond manufacturers. With diamond demand falling to fractions of early 2008 demand, employment levels were impacted, retrenchments undertaken, and production activities reduced or altogether suspended for some time. Ndjaba says that all 11 sightholders remain operational, although some at reduced capacity.In fact, diamond cutters and polishers were affected so much so that even though some had previously complained of the size and quantity of diamonds availed to them through NDTC, the crisis made it difficult for them to purchase what they previously criticised as ‘too little’.Asked whether the previous criticism featured at all during the course of the financial crisis, Njaba said that: ‘In fact, during the crisis the reverse was the case, i.e. NDTC offered more diamonds and sightholders could only take a little due to reduced demand.’He added that the NDTC only offers what sightholders apply for, and that this amount was at a very low level during the downturn, adding that ‘Throughout the downturn NDTC has adopted, and continues to adopt, a flexible approach for its sightholders and sightholders should make their own commercial decisions on what purchases are right for their businesses.’And what of NDTC’s outlook for a diamond recovery and for beneficiation? Ndjaba says that the signs are there for ‘cautious optimism’ given improved sales at the last few diamond sales sessions. He also said that ‘Historically, immediately following a recession, the bounce back in rough diamonds values has been dramatic, and we would expect to see a similar situation soon after the current recession is behind us and demand increases. This was even the case in the Great Depression where values largely recovered within a year.’But he notes – cautiously – that ‘the full recovery of the diamond industry can only be expected when the global economic crisis is over, which nobody seems to be able to predict.’In the meantime, he says, ‘I can just reiterate that the Namibian diamond manufacturing industry is still viable although negatively affected by the global economic downturn. NDTC is determined to provide the necessary support for the industry to thrive beyond this crisis.’nangula@namibian.com.na