Alrosa shows interest in Namibia’s diamonds: will Windhoek pave the way for the Russians?

28 July 2017
Alrosa diamond mining company’s management and some diplomats from diamond producing countries met in Moscow, Russia, in 2007 to discuss prospects of cooperation. The meeting was attended by representatives of Angola, Belgium, Zimbabwe, Canada, Congo, Tanzania, Sierra Leone, South Africa and Japan.
Although, Namibia did not attend the Moscow meeting, Alrosa said at the time that it would seek opportunities to establish partnerships in development of mineral resources with the southern African country, which is one of the top diamond producers in the world.
Much of diamond mining in Namibia is conducted by Namdeb Holdings, a joint venture between the Government and De Beers. Namdeb Holdings recorded an 11 percent year-on-year decrease in production to 1,6-million carats in 2016, largely due to lower output by Debmarine Namibia after the diamond mining
Mafuta vessel underwent extended planned in-port maintenance, and lower grades at Namdeb’s land-based operations.
Alrosa remains the world’s largest diamond mining company in terms of volume, after it produced 37,4 million carats of rough diamonds in 2016 down from 38,3 million carats, a year earlier. The Russian company’s main competitor, De Beers, registered a 5 percent decrease in rough diamond output to 27,3 million carats in 2016 from 28,7 million carats in 2015, due to its decision to reduce production in response to weak trading conditions.
An Alrosa executive recently said the diamond miner may expand mining in Africa after 2021, as the cost of prospecting on the continent is nine times lower than in Russia. The company’s current African operations were mainly in Angola, but it is also prospecting for diamonds in Botswana.
Alrosa and Endiama, Angola’s State-owned diamond mining company, each control a 32,8 percent stake in Catoca, while LL International Holding B.V., owned by China-Sonangol, controls an 18 percent stake. Brazil’s Odebrecht Mining Services owns 16,4 percent of the company.
Catoca currently produces about 80 percent of the country’s total diamond output. Angola produced 9,02 million carats worth US$1,1 billion last year, according to the Kimberley Process latest data.
Russia’s Research and Exploration company Deputy Director, Viktor Ustinov, said Alrosa and Catoca were engaged in teamwork in several areas, the most important of which include the analysis of geophysical data regarding the basement structure and orientation of tectonic faults in the existing concessions.
They were also involved in the identification of specific properties in the geological structure of kimberlite bodies and their constituent rocks as well as studying the composition of diamond indicator minerals in diamond-bearing areas for mineralogical research of kimberlite bodies and assessment of their diamond content in the new concessions held by Catoca.
Alrosa and Endiama recently signed a memorandum of understanding, a Luaxe international investment contract and notarial record for the establishment of Luaxe enterprise. Discovered in 2015, Luaxe is regarded as one of the biggest kimberlite deposits in Angola, with a projected annual output of between 8 million and 10 million carats.
Alrosa President Sergey Ivanov said last May that the Luele pipe, in the Luaxe concession, was “the largest of all those discovered worldwide over the last 60 years”, while Endiama Chairperson Carlos Sumbula also said that once in operation, Luaxe would more than double Angola’s diamond production to 20 million carats. Luaxe was expected to be opened late 2018 or early 2019.
Alrosa has also been involved in diamond exploration in Botswana since 2014 within the framework of a 50/50 joint venture with Botswana Diamonds, trading as Sunland Minerals.
Sunland Minerals was established in 2013 based on the decision by Alrosa executives, with the aim to identify primary diamond deposits in Botswana.
Sunland Minerals was last April awarded six new prospecting licences in Botswana for a period of three years ending on 30 March 2020. Four were in the Central Kalahari Game Reserve (CKGR) covering 3,135 square kilometres, while the other two were in the Orapa kimberlite province covering 482 square kilometres.
The CKGR area is close to the Gem Diamonds Gope Mine as well as high interest projects held by the Maibwe Joint Venture, where Botswana Diamonds was a partner. The Orapa area, North-East of Debswana’s Letlhakane Mine was selected because of unexplained anomalies around the area.
“I am delighted that we have been awarded this highly prospective ground in Botswana,” said Botswana Diamonds Chairperson, John Teeling, last April. “This will allow us to work with Alrosa to deploy advanced exploration technology to areas which have not been looked at through this lens before.”
Botswana Diamonds said there are 85 kimberlites in the Orapa kimberlite province, of which eight are current diamond mines, or had been active diamond mines previously.
An Alrosa team of geologists and mineralogists is currently in Botswana for the 2017 field exploration programme, focusing on sampling and geophysical studies on four licences, PL 260 in Orapa and PL 135, PL 235 and PL 234 in the Gope area.

Why Namibia?
Alrosa has registered tremendous success in Angola together with Endiama as its partner, and things look promising in Botswana.  Despite Botswana’s close relationship with De Beers, it’s interesting to note that Alrosa as a main competitor, was given licences through Sunland Minerals, to prospect for diamonds in the country, showing how progressive Gaborone is.
The overwhelming presence of De Beers in Namibia’s diamond industry, makes it interesting to see how Windhoek would welcome the Russians, should they come knocking. It is my considered view that, at a time when De Beers’ land-based operations are slowing down and facing an uncertain future due to dwindling reserves, Namibia needs companies like Alrosa, which has proved effective at finding diamond deposits.
Alrosa would, no doubt, complement the work that De Beers has been doing in the country for more than a century. Teeling recently said the Russian diamond company uses sophisticated exploration technology, which previously helped it discover 17 hard-rock diamond mines in Siberia.
Analysts believe that it would be foolhardy for De Beers to influence Government to deny the Russians prospecting licences in fear of losing its stranglehold on the country’s gems, especially at a time when the diamond miner is now focused on offshore diamond mining
Even if it takes long for Alrosa to acquire prospecting licences in the country, diamond sales is another area of possible engagement given that Windhoek now sell a minimum of US$150 million or a 15 percent representative cut-off of all Namdeb Holdings entire range into the international market. Namibia started independent diamond sales last year through the State-owned Namib Desert Diamonds (Namdia).
Russia’s Deputy Prime Minister Yuri Trutnev, who was in the country at the end of May, was quoted by Russian news agency, Tass, as saying the world’s largest diamond miner can establish a joint system of diamond sales with Namibia after Government and the De Beers Group entered into a new 10-year sales agreement.
Namibia Diamond Trading Company, a joint venture between Namibia and De Beers, remains the main vehicle for supplying local cutting and polishing factories. Trutnev believes that can be challenged.
“De Beers has no exclusive right to mine diamonds in Namibia and cut them,” Trutnev said. “Alrosa can also participate. We made the first step and offered development of the joint sales system to the Namibian party.”
It remains to be seen whether Alrosa would be allowed to enter Namibia as it has done already in Angola and Botswana, especially if that can lead to more diamond deposits in the country being found and to the setting up of similar arrangements the country has with De Beers, if not favourable.
 technologies and the construction of new base transmitter stations.


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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