Maihapa Ndjavera
De Beers Marine (Debmarine) Namibia’s revenue, production and earnings before interest, tax, depreciation and amortization (EBITDA) declined with significant percentages for the 2019 financial year. These declines were stated by the company’s chief financial officer, Willy Mertens, who on Friday morning confirmed that revenue dropped by 22% for the year, resulting in recorded revenue of N$7 billion compared to N$8.9 billion in 2018.
“Production for Debmarine decreased due to planned maintenance of the Mafuta crawler vessel. To add on the price performance, following a period of mild growth through 2017 and 2018, the global diamond industry struggled in 2019, mainly due to continued geopolitical instability. Despite more uncertainty in 2020, the industry’s long-term fundamentals are intact and we expect a positive outcome for the diamond market in the long-term. The work that we are embarking on around natural diamond initiatives becomes key,” said Mertens.
He added that Debmarine continued investment in a subdued market with capital expenditure increasing for 2019 to N$1.43 billion. It increased by 65% due to the funding of the N$7 billion state-of-the-art mining vessel known as AMV3.
Mertens revealed these developments last week during Debmarine Namibia’s annual stakeholder engagement breakfast. Among other results, diamond production also recorded a decline of 10% for the reported year. Production of diamonds in 2018 amounted to 1 436 000 carats and for the 2019 financial year dropped down to 1 292 000 carats. Furthermore, Debmarine’s EBITDA reduced by 53% during the year under review. The EBITDA dropped from N$4.6 billion in 2018 to N$2.2 billion in 2019. EBITDA is simply a measure of a company’s operating performance. Essentially, it’s a way to evaluate a company’s performance without having to factor in financing decisions, accounting decisions or tax environments.
Meanwhile, Mertens highlighted that Debmarine Namibia accounted for 72% of Namibia’s total diamond production in 2018, meaning that 28%, 572 000 carats, originated from Namdeb. However, during 2019, Debmarine Namibia secured a larger portion with 76% of total production while Namdeb only reported 24% (408 000 carats).
“The 2019 performance was subdued mainly due to the Mafuta vessel’s planned maintenance in port. The diamond market slowed down due to continued geopolitical instability in the two largest markets (USA & China). But we are confident the market will recover. No new large diamond mines are planned in the near future, hence supply is limited. The N$7 billion AMV3 investment is a testament of our confidence. In the interim, we are monitoring the market, and our overall strategy remains,” he noted.
The company’s direct contribution to Namibia in 2019 amounted to N$2.2 billion from income tax, royalties, PAYE and dividends respectively. This is a significant reduction from the N$2.9 billion in 2018 and N$3.5 billion in 2017.
–mndjavera@nepc.com.na