WINDHOEK - Namib Desert Diamonds (Namdia), the wholly-owned sovereign agency established to sell and market the country’s diamonds, on Tuesday handed over dividends amounting to N$50 million to the state.
The dividends were received by Minister of Mines and Energy, Tom Alweendo, who at the occasion called for more beneficiation of Namibia’s diamonds.
“Many of our local downstream industry players still do not offer cutting and polishing services of local stones, choosing instead to buy and sell to the secondary markets. This is a practice which could be harmful to the industry and one which I would wish to caution against. Let us not use the excuse of a lack of qualified human resources to cut the larger stones profitably to export our diamonds in their rough format, thus depriving the Namibian nation of the valuable foreign currency revenues we could accrue from value addition of the product,” said Alweendo.
He said government remains committed to providing training and resources towards the upskilling of the industry’s human resources. However, Alweendo called on the private sector and those directly benefiting from mining deals with Namdeb to join in developing Namibia’s human resources instead of importing skills at the highest cost to add value to local diamonds.
Local diamond production for the 2017/2018 financial year was just over 1.8 million carats of which Namdia and other sight-holders were offered 240 000 carats of Namdeb’s run-of-mine production valued at some US$360 125 000 as compared to US$291 800 000 in the 2016/17 financial year.
“Namdia has an opportunity to enter the lucrative downstream diamond industry whereby it should add value through polishing and cutting its entitlement of diamonds. I do realise that with the current 15 percent allocation, this may prove to be a challenge and therefore there is a window of opportunity in the medium-term to negotiate the terms of the contract to allow for an increased allocation. It may even want to consider venturing full-time into cutting and polishing as an extension of its current business. The ministry would be interested to hear from its board and management on how it intends to proceed on meeting the national long-term objectives of value addition of our natural resources through beneficiation,” said Alweendo.
“Namib Desert Diamonds has, by its own admission, had a very successful business run since its establishment some two years ago. But it has also been dogged by issues of negative perception which I am happy to say are changing for the better,” Alweendo added at the handover.
Namibia’s mining sector grew by some 12.2 percent in 2017 and contributed the same percentage to the country’s gross domestic product (GDP). This is in comparison to a contraction of 5.8 percent and GDP contribution of 12 percent in 2016, showing a marked improvement driven mainly by the improved output of diamonds, uranium and gold.
Alweendo explained that the increase in local entitlement came about as a result of the landmark 10-year Diamond Sorting, Valuing, Sales and Marketing Agreement between the Namibian government and De Beers, signed in May 2016. And, it was this agreement that led to the establishment of Namdia and allowed it to be able to receive a Purchase Entitlement of 15 percent from the Namibia Diamond Trading Company (NDTC).
This in essence means that Namdia buys a representative cut-off of 15 percent of rough diamonds mined by Namdeb through the NDTC.
“We are all aware that the world’s diamantaires have a great appetite for Namibia’s rough diamonds and Namdia’s mandate, which can best be described as aimed at discovering the real price for our diamonds …. It is entrusted with a high value resource which can provide meaningful change to the lives of our people through the payments of dividends and taxes to government which will in turn be used for the broader socio-economic infrastructures of our society. And therefore, Namdia has a huge role to fulfill. It is not just another diamond trading company. It is one, wholly owned by the Government of the Republic of Namibia and in so doing, the people of this republic and has a distinct fiduciary and moral obligation to ensure that it passes on the real value of our natural resources to its rightful recipients,” said Alweendo.
According to Namdia CEO, Kennedy Hamutenya, the agency’s total revenue for the period under review was about N$2 billion of which nearly N$80 million was paid in taxes and export duties resulting in after-tax profits of close to N$140 million.
“This financial performance is stellar and outstanding by any standard and we hope and are cautiously optimistic that this full year’s performance is an indicator of great things to come in the medium to long-term. As we improve on our business processes and strengthen our governance systems; and as we exploit synergies and leverage the strengths of our business units, we hope and are confident that we will be able to maximise shareholder value in line with the noble ideas of the Harambee Prosperity Plan, the National Development goals and Vision 2030,” said Hamutenya.