De Beers, which owns a 50 percent stake in Namdeb Holdings, last week released its first half production figures which showed a 17 percent increase in production to 900,000 carats compared to 700,000 carats in the first half of 2016.
The company attributed the increase in production to the re-entry of Debmarine Namibia’s Mafuta vessel, which went on extended planned in-port maintenance in the second quarter of 2016.
The Windhoek Observer’s Business Reporter, Chamwe Kaira (CK), spoke to De Beers CEO, Bruce Cleaver (BC), about the results and the diamond producer’s future plans.
CK: I recently visited Debmarine operations in Atlantic 1, and there was talk that more vessels could be added to your fleet in the near future, after Debmarine commissioned the mv SS Nujoma exploration vessel. Can you please elaborate on these plans?
BC: As you know we launched the SS Nujoma, which is an exploration and sampling vessel in June and that is a great step forward because it has a huge amount of new technology on it, which allows us to explore the sea better and more efficiently than before. That probably allows us to start thinking at some point of another mining vessel.
We have the mv Mafuta, which is a mining vessel and so, we are in the early stages of thinking about another vessel, but I think it’s a bit premature. We have to go through all the work, costing etc. The fair thing to say is that we are all very interested in expanding the mining capacity in the sea, but maybe we are not quite there yet.
CK: What is the current life span of your sea operations?
BC: The licence at sea is up to 2035, that is the maximum timeline offered in the Mining Act, but there is no question that the resource will last beyond that. We estimate the resources will last until 2050, a very positive position for us and for the country obviously.
CK: You seem to be focused more on marine mining. What about land-based diamonds? Can they be mined and explored further?
BC: I think the land operation is in a different place compared to the sea operations, land is really in the twilight of its life. It has been a successful business for a long time as you know, but it’s coming to the end of its life. Out of the 860,000 carats that the Namdeb Holdings Group produced in the first half of the year, probably 20 or 25 percent came from the land business.
The land business is struggling because it’s moving towards the end of its life and I think it will be difficult to find new deposits on land. The thing that the management of the land business is going to try and do is find the most efficient way of keeping the mine going the longest. We can and are working hard on that, but I don’t think it’s a huge source of new production for us.
CK: What is your production forecast for Namibia this year?
BC: We don’t actually give our production forecast one by one. But we can say as a group that we will produce 31 to 33 million carats this year. You will see from the release that you got, that the bulk of those are produced in Botswana, and then in South Africa, and so Namdeb Holdings doesn’t produce a massive amount of carats relative to the rest of the world, but it does produce very high value carats.
You could roughly be speaking of double the production that we have done in the first half of the year, so you can work it out.
CK: Namdia is claiming to be bringing more value to Namibian diamond sales compared to De Beers, how is that?
BC: I don’t recognise that information from Namdia, quite frankly. I can only tell you about De Beers. What I can tell you is that, we as De Beers, sustain the local beneficiation industry, and Namdia does no local beneficiation. So, there are 11 factories in Namibia employing about 600 people, all from the De Beers side. Our contribution to Namibia is enormous in terms of the technology that we provide.
The sea business wouldn’t be there without De Beers’ technology. We also do local beneficiation. The partnership between De Beers and the Namibian Government delivered more than N$10 billion of revenue last year, so the contribution that De Beers makes is enormous. It’s all over the show, it’s on the mines, and it’s in communities.
CK: Namdia and NDTC appear to be duplicating each other’s role, what is your comment on that?
BC: I don’t think there is duplication. NDTC is a 50-50 joint venture between De Beers and the Government of Namibia, which sorts and values diamonds and sales on De Beers behalf to local factories, while Namdia is a window that the Namibian Government created at the time of the last sales agreement, and sells on behalf of the Namibian Government. So, I don’t think there is duplication, Namdia doesn’t do local beneficiation and only sells to international clients. The sorting and valuating gets done by NDTC and not by Namdia.
CK: Is there anything else that you wish to add?
BC: There are two things that are worth mentioning: one is to remind you of the scale of the investment that De Beers makes in production around the world. One of them we have spoken about is the SS Nujoma, at a cost of US$157 million. We are in the course of 2017, our big mine in Canada, which is called Gahcho Kué, went into production. In South Africa, we are spending a massive amount of money at Venetia going underground. In Botswana, the next cut in the big mine there at Jwaneng is just about ready. So we continue to invest as the De Beers Group in production, all over the world including in Namibia.
The other thing, which I think is worth mentioning is that, we are very focused on innovation and technology in Namibia, so the SS Nujoma is a great example of technology built by De Beers, completely unique to De Beers. All of our businesses around the world are focussing on technology and innovation.
The last thing to say is that, we shouldn’t forget that diamonds need to be marketed, they don’t sell themselves, and you need to invest to stimulate consumer demand. De Beers is very good at that and spends lots of money on that; we are going to probably spend US$25 million more than last year on marketing diamonds in the main consumer market, the US, China and India.
This will take more Namibian diamonds to the world in a way that has not been done before.