De Beers ‘undervaluing Namibian diamonds’

09 February 2018
Namdia’s first annual report, which is expected to be tabled in Parliament this year, is expected to reveal that it has been selling its 15 percent allocation of diamonds produced by Namdeb Holdings for over and above De Beers selling book price.
Namdia is reported to have sold diamonds worth over N$1billion and paid N$60 million to the government in taxes.
A source that has seen the report but cannot publicly comment on it since it has not been made public, said De Beers is alleged to have been undervaluing Namibian diamonds.
De Beers Country Director, Daniel Kali said in an interview with the Windhoek Observer that he cannot comment on matters related to Namdia since he has no access to its selling mechanisms, their clients or what prices are paid for their diamonds.
Kali said De Beers has “an outstanding track record of optimising Namibia’s diamond revenue, as this benefits both Namibia’s economy, and De Beers’ own financial performance.”
He said De Beers’ own financial returns are a direct percentage of what it is able to sell diamonds for.
“Selling diamonds below their optimum price would not only disadvantage Namibia and her economy, but would also disadvantage De Beers and its financial performance,” Kali said.
“Second, the realities of the commercial environment also need to be considered. When selling a larger volume of production, the market clearing price will inevitably be impacted, Namdia is clearly selling significantly lower volumes.”
Kali said it was for this reason that De Beers operates an approach of combining term contract sales and auctions for a smaller share of the overall availability.
“This balanced approach delivers optimum revenue potential for both Namibia and De Beers over the long term, which is vital for products such as diamonds which contribute so much to the national economy.”
He said the joint venture between De Beers and government continues to be the biggest contributor to Namibia’s treasury, biggest earner for Namibia’s exports, and strongest contributor to GDP.
“Our selling process is open, and our clients are well known diamantaires, selected through an open, transparent and competitive process.”
Namdia’s Chief Executive Officer, Kennedy Hamutenya in an earlier interview with a local magazine said Namdia was selling 15 percent of Namdeb Holdings diamonds for over and above De Beers selling price.
Hamutenya said people should in fact question the sale of the rest of the 85 percent by De Beers.
“If our price is higher than theirs, it can mean that the bulk of the Namibian diamonds are grossly being undersold. This is simple logic.”
Namdia declined to comment this week, saying that the company will only grant interviews after the release of its annual report later this month.
In May 2016, government and De Beers signed a new 10-year sales agreement for the sorting, valuing and sales of Namdeb Holdings’s diamonds.
The agreement saw Namibia securing a significant increase in rough diamonds made available for beneficiation, with US$430 million of rough diamonds being offered annually to Namibia Diamond Trading Company (NDTC) customers.
As part of the agreement, all Namdeb’s Special Stones are now made available for sale in Namibia.
In addition, the agreement provided for 15 percent of Namdeb’s production per annum to be made available to Namdia. 


The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

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