The new diamond sales and marketing agreement between the Namibian government and De Beers Société Anonyme would, in an unprecedented step, allow Namdeb to sell Namibian diamonds to third parties, by-passing the long-standing traditional arrangement of selling through De Beers channels at a time and price dictated by De Beers, the world’s largest diamond producer by value.
To take advantage of the new agreement Namibia is currently in the process of establishing a new diamond sales and marketing company, christened /Nore /Uis, revealed the Minister of Mines and Energy Obed Kandjoze in an exclusive interview with New Era on Wednesday.
Previously Namdeb was not allowed to sell diamonds through outside channels.
De Beers Société Anonyme had a ‘delivery entitlement’ clause inserted in the previous agreement to regulate the flow of Namibian diamonds into the international diamond market, by deciding when, the quantity and quality and at what price to buy Namibian diamonds.
“That clause is out of the new agreement, meaning De Beers will not set the price as was provided by the clause. We will not be obliged to do business along those lines anymore,” he said.
“The agreement opened a window on the market that enables government to buy a portion of rough diamonds and sell them through alternative channels,” the minister said.
He nevertheless said the new entity, /Nore /Uis, would not be competing with Namibia Diamond Trading Company (NDTC) which sells to the local diamond cutting and polishing sector.
De Beers Société Anonyme operates as a subsidiary of Anglo American and is a holding company to subsidiary diamond mining and exploration companies across the world, including the De Beers Holding, which jointly owns Namdeb with the Namibian government on equal shares, as well as De Beers Marine Namibia where government has had 30 per cent shareholding. Until now, and with the exception to Botswana who has 15 per cent in De Beers alongside Anglo America, De Beers has maintained a firm grip on how diamond-rich countries and shareholder governments interact with the world diamond supply. De Beers diamond sorting and aggregation businesses, which has been moved to Botswana, sifts through the production from each of its mines and bring the gems together before they are allocated to buyers through the system called ‘sights.’
“The delivery entitlement provision that allows De Beers to choose not to buy mine production during depressed market conditions poses high risk for mining operations because Namdeb bleeds while they scout the markets. They used to call the shots, this is not the case anymore,” he said.
“If the market is bad, De Beers will opt not to buy and Namdeb will be forced to stockpile at its own cost until the market improves. Namdeb runs losses while waiting for the markets to improve because they have to stockpile while De Beers runs no risk at all,” he said. Namibia and De Beers Société Anonyme are in the process of signing the new terms of diamond sales and marketing agreement. De Beers’ group chief executive officer Philipe Mellier has this week expressed satisfaction with the terms negotiated.
“We are happy, we are all smiling and negotiating together with it. We will invite you when we are going to sign the agreement,” Mellier told journalists after meeting with President Hage Geingob at State House this week. Kandjoze however says despite the successful negotiations more still needs to be done to ensure that raw materials benefit the local economy.
Since independence foreign multinationals have been flexing their muscles in the mining industry, a situation that Kandjoze says would soon change.
Kandjoze, appointed by President Hage Geingob in March due to his mining background, said although there are some terms that could have been negotiated differently, he is happy with the final outcome of the negotiations.
“You must remember that we are in partnership and therefore we cannot expect everything to go our way. Investors are very important in this equation. Government is happy with the terms,” he said.
The new terms for diamond sales and marketing agreement would also increase the supply of rough diamonds to the local diamond cutting and polishing industry.
Currently the industry is supplied with 10 percent of the value of local rough diamond through the NDTC, which has previously said the amount is not sufficient to sustain the local diamond cutting and polishing industry.
New Era Reporter
2015-06-26 10:10:41 | 4 years ago