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Is Namdeb really closing down in the next three years?

2019-08-30  Toivo Ndjebela

Is Namdeb really closing down in the next three years?

Namdeb CEO Riaan Burger walks New Era Managing Editor Toivo Ndjebela through the company’s journey, its importance to the country and how, sadly, it may close down in three years time if no new economically viable discoveries are made.

New Era (NE): How is Namdeb managing change, especially with so many things happening right now, including the declining onshore resources?
Riaan Burger (RB): First of all, mining is finite. One has to accept that. At Namdeb, or CDM as it was called then, has since 1908 (when it was founded) we perhaps got used to the idea that it would last, but it wouldn’t. Any diamond or mining operation would close at some point. We have declining on-land reserves but we also have opportunities. At the moment we can economically continue to operate for another two to three years – in terms of operational life. That’s the plan. Then we have the mines closure in 2022. In preparation for that we have already briefed all the stakeholders – employees and so forth – and are really making sure that we are planning well for that. The transformation of the town of Oranjemund and how we are approaching it… we are transforming it, together with town council, into a community that is diversified, where people own property and so forth. Then we have a whole team that is looking at closure.  There’s a team looking after post-mining rehabilitation and so forth… That’s where we are at the moment. 

NE: To what is the predicted closure attributed? In other words, what necessitates this closure?
RB: We continue to explore for new opportunities. We are constantly drilling and our exploration team looks for new opportunities in our license areas. We know that we can potentially mine further but currently it’s not economic to do that. We must also appreciate that Namdeb mines different types of ore bodies. We mine along the Orange River itself on the conventional on-land deposits, and there’s some scope to extend the life from that. The other type of mining we do is actually coastal ocean along the beaches and what we call Mining Area 1. And there we have got an opportunity to extend our mining into the current surf zone of the sea to the shallow marine areas. We have already been doing this for years. That ore body extends into the sea and there’s potential to mine that but it’s a costly exercise and one need to get a few things correct to extend the life. Again as things stand, all these are currently not economic for us to continue mining.

NE: How are Namdeb employees taking the news that the company may wind up in three years’ time? 
RB: People are obviously concerned that there’s a limited lifespan but at the same time I’m pleasantly surprised by the optimism of the people of Namdeb. You must remember that Namdeb had a finite life for many years already where we would have closed down in 2012 then we were able to extend the life. In general the people of Namdeb are quite resilient and they have a positive outlook. I was encouraged by the tenacity shown by our employees. People are really committed to find alternatives to extend the life of the business and to continue making it profitable for years to come. I am optimistic we will find a way to extend the lifespan but this would require a lot of support from our shareholders.

NE: In the event that you wind up, would that be the end of the legacy or is Namdeb looking at other industries to venture in?
RB: In terms of the closure project, there are a number of aspects to it. First and foremost, there would be a rehabilitation phase, which requires environmental rehabilitation, demolition of structures, cleanups and so forth. It would take approximately five years to do a proper rehabilitation. Remember you’re dealing with a 100-year legacy of mining and we need to prepare the future use of this land. Then there would be four more years of after-care to make sure that the legacy continues. 

NE: What is the current status of your mining activities and where are these activities taking place?
RB: We have effectively four operations. We have two mines along the Orange River; one is called Sendelingsdrif and the other one is called Daberas mine. Then we have the mainstay of our operations, which is Mining Area 1, or Southern Coastal Mines as we call it. It’s a number of mines along the coast which have one processing plant – that makes up the bulk of our production. We also have the Elizabeth Bay mine, which is currently on care and maintenance. Sendelingsdrif and Southern Coastal Mines are scheduled for closure in 2022 and Daberas mine is scheduled to close down next year already.  

NE: Speaking of Elizabeth Bay mine, why is Namdeb selling it?
RB: We simply could no longer operate it economically. The board [of directors] then decided it should be placed on care and maintenance. We then proceeded with the process of whether we can re-open it economically or potentially dispose it off. We hope to conclude this project soon.

NE: Does selling it suggest other investors may run it economically though Namdeb may not?
RB: Yes. There are different players with different cost structures and methodologies. Namdeb, being a large organisation, has a certain cost structure. We believe Elizabeth Bay could be operated economically with a very lean cost structure, different from how a big organisation like ours may operate it. 

NE: How important is Namdeb to the Namibian economy and how would closure affect the country?
RB: Closure would have a significant effect on the fiscus. In terms of dividends, our shareholders don’t receive a lot of it. In fact the last time Namdeb declared dividends was in 2012. However, through taxes, royalties and pay-as-you-earn from our employees, in the last seven years we have put over N$4 billion into the fiscus. From a fiscal point of view, we are one of the largest contributors to state coffers. Closure would be a hit on the economy. Our annual turnover is N$3 billion and on average 85 percent of that goes into the Namibian economy. This is a national asset for which we must find ways to prolong its lifespan.

NE: How much does Namdeb subscribe to the Kimberley Process in ensuring that Namibian diamonds do not end up being used to fuel conflicts around the globe – blood diamonds as those are called?
RB: We have a very strict policies and systems in place, first to ensure they are extracted ethically and that they are used for good intentions. An external audit is conducted annually by independent parties to see how our diamonds are used. We derive pleasure from knowing that the consumers can have absolute certainty that when they buy Namdeb diamonds, they are buying diamonds that do good for society like building schools and so forth.

NE: What, in your own view, is Namdeb’s proudest story?
RB: We have put a significant amount of money into the Namibian fiscus since Namdeb was formed in 1994. We need to appreciate that. Another thing I am proud of is the development of people. Many professionals working in many companies in this country got their first footing in their professional development at Namdeb. [Former Telecom Namibia managing director] Frans Ndoroma worked with me, he was head of metallurgy at Namdeb, Otto Shikongo [Debmarine CEO] was engineer with me at Namdeb, many people at Debmarine were Namdeb employees… so I’m really proud of that legacy. These are world class professionals and leaders.  

NE: Namdeb has hundreds of houses in Oranjemund. What’s the company doing with those houses, especially in light of possible closure of the company?
RB: Look, we are diamond miners. Property management is not our area of expertise. We will retain the properties we need at Namdeb. Oranjemund has become a normal town, with citizens taking ownership of their lives. So far 21 deeds have already been transferred to private individuals and another 129 are in the process of being transferred. 

2019-08-30  Toivo Ndjebela

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