Namibia Diamond Trading Company (NDTC) has ruled out the possibility of introducing diamond auctions in the sale of its products.
The company which is 50:50 joint venture between the government of Namibia and De Beers, currently sells its diamonds directly to local sight holders, the Namibian diamond cutting and polishing industry, in line with the 10-year Namibian Sorting, Valuing, Sales and Marketing Agreement signed in May 2016.
“NDTC’s rough distribution strategy is based on what is commonly referred to as the Sight system. This Sight System is premised on NDTC entering into long-term supply contracts typically 3-5 years with its customers. In addition to this, NDTC provides its sight holders with the ability to plan the delivery of its allocation over a 12-month period. We believe that this, coupled with the regularity of supply, enhances the planning capabilities of the NDTC sight holders thus improving supply chain efficiencies while giving them a longer planning horizon,” NDTC CEO, Brent Eiseb told the Windhoek Observer.
“One must also take into consideration that NDTC sight holders have and continue to invest in infrastructure and technology in order to improve the sustainability of their Namibian factories and it is therefore important that the rough diamond supply is not only regular but is over a longer period. On this basis, it is clear that the current rough distribution model is aligned to and fully supportive of NDTC’s mandate of facilitating downstream beneficiation in Namibia and as such there is no intention to move away from this,” he said.
De Beers on the other hand, in its 2010 agreement with the government of Botswana, agreed to move its rough diamond sales valued at N$84 billion from London to Gaborone, which according to Reuters, is one of the most dramatic examples of a producing country battling successfully to keep value and profits from its raw materials at home.
The move secured a new 10-year contract for the sorting, valuing and sales of diamonds from the Botswana mines run by Debswana, a 50:50 joint venture between De Beers and that southern African country’s government - the longest sales contract agreed to date between the two sides.
According to the 2011 deal, the Botswana government will be able to sell a portion of local production through state-owned Okavango that will increase to 15 percent.
Eiseb said the NDTC’s operating model remained viable, with focus being put on ensuring that the company supplies the required diamonds its sight holders.
“NDTC’s primary focus is to ensure that we maximize the value from the limited availability by ensuring we supply as much of it to those sight holder factories that process a larger proportion of rough purchases from NDTC in Namibia. NDTC currently supplies approximately N$6.3 billion (45 – 50 percent of NAMDEB Holding’s total production by value) for the purposes of supporting value addition and beneficiation activities in the Namibian diamond industry,” he said.