The Namibia Diamond Trading Company (NDTC) has revealed that it has sold diamonds worth over N$30 billion to Namibian cutting and polishing factories since its inception in 2007.
Brent Eiseb, a 24-year veteran of the diamond industry who has risen through the ranks starting as a Sorter and recently appointed the company’s Chief Executive Officer, said 17 million carats of rough diamonds have been sorted, valued and distributed by the company, with N$1.5 billion paid in corporate taxes and N$1.2 billion in dividends declared to government.
“Reflecting on the previous 11 years since the establishment of NDTC, we has successfully executed our mandate of sorting, valuing, selling and marketing of rough diamonds mined by NAMDEB Holdings while ensuring downstream beneficiation makes a positive impact in the lives of ordinary Namibians.
“NDTC has and continues to play a major role in the establishment of a sustainable, resilient cutting and polishing industry that directly employs over 1,000 Namibians. It is evident from the above, that NDTC is well-placed to continue to successfully fulfill its mandate and to create value for its shareholders and stakeholders,” he told the Windhoek Observer in an exclusive interview.
He, however, acknowledged that the requirements and pressures on the business have changed, with the company now required to split 15 percent by value of diamonds and offer them for sale to NAMDIA.
“Increased amounts of rough diamonds made available for sale locally requiring us to split off and prepare a larger proportion of Namibia’s production for offer to NDTC Sightholders, value the entire +10.8ct diamonds in Namibia, a position which has forced the company to establish a specific department equipped with the latest technology and appropriate skills to ensure this is done properly in Namibia. This will be done in line with the new Namibian sorting, valuing, sales and marketing agreement between the Namibia and De Beers.
“This, coupled with the ever-changing business environment because of increased volatility in the global diamond industry, means there is a definitely a need to constantly look at how NDTC delivers against its strategic objectives. Like any other business, NDTC is also under pressure to deliver more with less and as such, we will be looking at how we can deliver the strategic objectives efficiently,” he said.
Quizzed if the company’s existing business model was under threat in line with the changes brought about by the revised agreement between government and De Beers and if it impacted on the sustainability of the business, Eiseb said it was unlikely that changes would be effected as its operational model was also stated as part of the government agreement.
“NDTC’s business model is based primarily on its mandate as set out in the marketing agreement between the Namibian government and De Beers. The business strategy is closely aligned to this and is geared towards ensuring NDTC is able to successfully deliver its mandate of sorting, valuing and selling the rough diamonds produced by NAMDEB Holdings while ensuring the establishment and growth of a downstream diamond industry in Namibia,” he said.
“Despite the fact that we have seen quite a bit of volatility in the global diamond industry since the establishment of NDTC, it is evident that the NDTC business model and strategy has been very effective in ensuring we are able to consistently and successfully deliver on our mandate and business objectives on a sustainable basis. I do not see this changing.”
On the impact of the turbulence in the global diamond industry which has witnessed a decline in prices and decreased demand from key markets such as the United States, Eiseb said, “We are currently navigating our way through a challenging period in the midstream of the diamond industry, however, we anticipate that the key issues will be short term.
“The challenges that we currently face are mainly because of polished inventory overhang, tight liquidity in the midstream and tight margins due to a sustained reduction in the prices of polished diamonds. In addition to this, the trade tariff standoff between the USA and China, two of the biggest diamond jewelry consuming markets, is impacting sentiment and confidence in the industry.
“Notwithstanding this, we believe that lower rough diamond sales over recent months coupled with robust retail demand in the key market of the USA, accounting for approximately 50 percent global diamond jewelry demand, should aid with addressing the challenges in the short to medium term. On this basis, we remain cautiously optimistic about the sustainability of the business and the industry at large, “he said.
The NDTC CEO downplayed the possible impact that the current global challenges faced by the sector may have on the company’s ability to meet its mandate and contribute positively to the fiscus.
“NDTC over its 11 years of existence has experienced a number of industry downturns. The first and major one being the 2008/2009 global financial crisis. Since then, the business and the industry has had to navigate a number of global downturns most notably in 2012 and again in 2014/2015. Despite this, NDTC has been able to consistently fulfill its mandate and create value for all its stakeholders. I am confident that NDTC will continue to contribute positively to efforts made in maximizing for the country the benefits derived from diamonds mined in Namibia,” Eiseb said.
On the possibility of the company localizing its diamond auctions, following in the footsteps of Botswana, the NDTC CEO ruled out that option.
“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 Sightholders 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 ND TC Sightholders thus improving supply chain efficiencies while giving them a longer planning horizon,” he said.
“One must also take into consideration that NDTC Sightholders 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 dependable 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 the lack of commitment among key stakeholders in the further development of skills in the sector hampers the possible establishment of the country’s jewelry manufacturing sector.
“NDTC has always prided itself on its ability to develop business critical skills in- house. We have a fully functioning training and development section in the business that is tasked with not only developing technical skills such sorting and valuation in what we commonly refer to as the Diamond Academy. In addition to this, we take a holistic approach to training and developing our employees in skills required for them to be effective in their jobs,” he said.
“Sightholders have invested heavily and have made a significant contribution to the development and transfer of skills in the cutting and polishing industry. This said the efforts made by NDTC and its customers are not sufficient if we have to unlock further opportunities in downstream beneficiation. The country needs to consider taking a holistic approach to skills development if we have to unlock further opportunities in the downstream beneficiation space. For example, we cannot even start to think about creating a sustainable jewelry manufacturing industry if no effort has been made in developing jewelry design skills.”
The NDTC boss said although the recently announced government evaluation tender has presented some challenges, due to the possible loss of skills, the company has contingency measures in place to avoid any significant impact on its operations.
“It is likely that based on the announcement, NDTC will lose some of its key sorting skills. We have however put plans in place to mitigate the potential impact on NDTC operations,” he said.
Lastly, he said the company was doing its part as a responsible corporate, through partnering in initiative that impacts the Namibian public at large.
“In the last 10 years, NDTC has invested significantly across various sectors. We are most proud of our recent partnership with the Olafika Mentorship Program that aims to polish and develop at least 70 entrepreneurs across all 14 regions. Through intensive training a mentorship. We believe that this will build capacity on the regional level enabling entrepreneurs to increase their numbers of employees as well as improve on their product and service delivery,” he said.