Recovering diamond market could result in more cutting and polishing factories

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WINDHOEK, 10 April 2014 - Chief Executive Officer of Namibia Diamond Trading Company (NDTC) Shihaleni Ndjaba pictured during the visit of First Lady Penehupifo Pohamba's at the company's head office on Thursday. (Photo by: Joseph Nekaya) NAMPA

Edgar Brandt
Windhoek

With diamond sales demand picking up in 2017, coupled with a relatively new sales and marketing agreement between the government and De Beers, the Namibia Diamond Trading Company (NDTC) has not ruled out the possibility of more players entering the cutting a polishing arena.

This is according to the NDTC, which currently sells rough stones to 11 local cutting and polishing factories, known as sightholders, who purchase the precious stones directly from the NDTC for local value addition.

Since its inception, NDTC has paid out N$1,7 billion in dividends to both its shareholders (government and De Beers) and has paid about N$1,1 billion in taxes to government.
According to senior manager for sales and marketing at NDTC Brent Esieb, the industry already witnessed string demand during the first quarter of 2017 and he foresees this trend continuing for the rest of the year. This follows a dramatic drop in sales in the second half of 2015.

Consumer demand for diamonds returned to somewhat normal levels during 2016, which saw a stable demand for both polished and rough diamonds.

The government and De Beers signed a new Diamond Sorting, Valuing, Sales and Marketing Agreement in May 2016, of which one of the key outcomes was the increase of the Local Offer Threshold to a price indexed annual amount of US$430 million.
In addition to the increased Local Offer Threshold, the local diamond cutting and polishing industry has seen NDTC offering all the +10.8 carats, including stones classified as ‘exceptional’, to its Namibian customers. These changes are anticipated to have a significant positive impact on the growth and long-term sustainability of the Namibian cutting and polishing industry.

Other suspected benefits included increased opportunities for job creation and skills transfer, investment in infrastructure (including technology) and further integration and empowerment of Namibians at all stages of the diamond value chain.

NDTC has since introduced a minimum supply level of US$15 million, with the objective of starting all local diamond cutting and polishing factories off at a level of supply that ensures reasonable viability and sustainability.

CEO of NDTC Shihaleni Ndjaba recently stated that the partnership between NDTC and the current 11 sightholders has been successful in creating a remarkably resilient local downstream beneficiation industry.

“Since the advent of beneficiation sales in 2007, NDTC has sold close to N$26 billion worth of rough diamonds to be cut and polished in Namibia. This has enabled NDTC Sightholders to not only directly employ close to 1,000 polishers, but has also resulted in significant investment in infrastructure and technology in the Namibian cutting and polishing industry, which in turn has improved the industry’s competitiveness,” Ndjaba said.

A few weeks ago Mines and Energy Minister Obeth Kandjoze castigated local sightholders for a lack of local value addition, or beneficiation, after diamond export data from the Office of the Diamond Commissioner indicated that only about 20 percent of the total beneficiation sales made by NDTC during 2016 was processed locally.

Kandjoze noted that a mass export of rough diamonds is not only a loss to the country, but more importantly undermines government’s efforts to eradicate poverty and unemployment, as well as its efforts to improve the lives of ordinary citizens. At the time Ndjaba said the minister’s position is crucial in the context of NDTC’s mandate of supporting and facilitating beneficiation.

“The minister has clearly articulated government’s expectations and aspirations from a beneficiation standpoint and we are happy to state that this position is fully aligned to the NDTC rough distribution strategy of allocating a greater share of our rough diamonds to those sightholders that maximise the cutting and polishing of their purchases from NDTC in country,” he said.

Ndjaba further alluded that – following Kandoze’s call – NDCT has already seen progress in the percentage of local diamond beneficiation.

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