DIAMOND production from January to June fell by more than 60 per cent compared to the first six months of last year. Production came in just under 400 000 carats, compared to over a million carats in 2008, Old Mutual Namibia Group Economist Robin Sherbourne (pictured) said.We are maintaining our view that total production for this year will be less than one million carats, he said.
The news comes as Namdeb announced it is drastically scaling down operations at Elizabeth Bay to prevent a loss of about N$76 million at the mine this year. The move is the latest in a series of lifelines to keep Namdeb afloat in the global financial storm.
Despite mining 2,1 million carats last year, Namdeb could only sell 1,611 million carats as global spending power shrunk and reduced diamond exports by 30 per cent compared to 2008.
The company subsequently decided to operate on reduced shifts from January to March, and went on a production holiday from April to June. They asked shareholders, Government and De Beers for letters of comfort to back up overdrafts of N$650 million at the four local commercial banks and cut nearly 2 000 jobs.
To prevent Namdeb from collapsing, Government recently helped the company to sidestep the Diamond Trading Company (DTC) in an unusual move to sell a significant portion of its stockpile directly to the Indian consortium, Diamonds India Limited.
Citing a lack of cash support from Government and De Beers, Namdeb also retained the N$51 million it owed the shareholders for 2008. In addition, it asked Government for a temporary waiver of royalties, which roughly calculated, is worth some N$565 million.
Hilifa Mbako, Group Manager for External and Corporate Affairs at Namdeb, yesterday didnt want to comment on the status of the waiver request.
He did, however, say that the latest developments regarding Elizabeth Bay shouldnt significantly impact production and that Namdeb is still on schedule to meet its target. What exactly the target is, is difficult to pin down, according to Mbako.
Namdeb is responding to global demand and therefore is continuously adjusting its target, he told The Namibian.
Commenting on the performance of the diamond sector for the first six months of the year, Sherbourne said sales picked up in May and June, totalling about 550 000 carats.
However, this was largely due to the deal with Diamonds India Limited (DIL), a group of 58 leading diamond and jewellery manufacturers and exporters in India, he said. Average prices at the last two sales were also far below those of previous months, suggesting that it was the smaller stones that were traded, Sherbourne said. It is not just the diamond sector that still lacks lustre.
Uranium production has not been as high as expected and production at Skorpion Zinc has remained stable.
Against this background, Sherbourne said he is sceptical about the Bank of Namibias (BoN) recent statement that the domestic mineral sector witnessed a remarkable recovery during the second quarter of 2009.
We believe that there is little evidence for statements as bold as this, Sherbourne said, adding that diamonds, uranium and zinc make up the lions share of Namibias mining sector.
He said the production of uranium oxide, from both Langer Heinrich and Rio Tinto Rssing, for the second quarter was 1,8 per cent lower compared to the first three months of the year, and was only 3,9 per cent higher than the second quarter of last year.
The latest figures suggest both mines are a long way short of achieving the full year production forecast of 6 100 tonnes we had made for 2009, Sherbourne said.
The Namibian
Post published in: Economy