DeBeers Works Out New Plan with Namibia to Extend Life of On-Shore Diamond Mines until 2042

Namdeb Diamond Corporation, a fifty-fifty joint venture between De Beers Group and the Government of Namibia, which has been mining diamonds in Namibia for over 100 years, since 1908, announced in September 2019, that due to declining on-land reserves, though the company was continuing to operate economically at the moment, in three year time in 2022, the operational life of the mines would come to am end.

On shore diamond mines in Namibia
On shore diamond mines in Namibia

Namdeb’s CEO Riaan Burger said at that time, the Company had four ongoing operations, two mines along the Orange River, the Sendelingsdrif and Daberas mines, the Southern Coastal Mines or Mining Area I, the mainstay of the Company’s operations, consisting of a number of mines along the coast with one processing plant, and the Elizabeth Bay mine which was on care and maintenance at that time. Daberas mine was scheduled to close in 2020 and Sendelingsdrif and Southern Coastal Mines was set for closure in 2022.

Sendelingsdrif mine
Sendelingsdrif mine

CEO Burger further said, the Company was constantly drilling and exploring for new opportunities in the licensed areas and was aware that the Company could potentially mine further but currently it was not economic to do that. Expanding further on the potentials available for extending the Life of Mines (LoM), he said there was some scope available for extending the life of the conventional on-land deposits that is being mined along the Orange River. Likewise in Mining Area I, where mining is done along the coastal beaches, opportunities are available to extend mining operations into the current surf zone of the sea to the shallow marine areas. The coastal ore body extends into the sea and there is potential to mine this area, but it’s a costly exercise. However, the CEO said at that time, as things stand all these are currently not economic for us to continues mining.

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According to Namdeb’s CEO, closure of the on-shore mining operations would have a severe impact on Namibia’s state coffers as the company was one of the largest contributors to the state’s economy, having contributed over N$4billion within the previous seven years, and contributing 85 percent of the annual turnover of N$3 billion to the state coffers. This is a national asset for which we must find ways to prolong its lifespan, said CEO Burger.

Orange river sendelingsdrif mine
Orange river sendelingsdrif mine

In keeping with the wishes expressed by Namdeb CEO Rian Burger in September 2019, to prolong the lifespan of the mines, De Beers announced on Thursday October 14, that following a series of positive engagements between Namdeb’s management team and the Namibian Government, a new long-term business plan has been agreed upon, that will extend the life span of the on-shore diamond mines for another 20 years, until year 2042.

According to Namibia’s Minister of Mines and Energy, Tom Alweendo, safeguarding the land-based operations for sustaining the life of the mines, was imperative for both the national economy, as well as, preserving employment for the people and the livelihoods of families that depended on it.

Southern coastal mines of  Namibia
Southern coastal mines of Namibia

Under the new plan agreed upon by both parties, the government will reduce the royalties it charges Namdeb from 10% to 5% for the period from 2021 to 2025, enabling the company to extend mining in an economically sustainable way, while also giving around N$40 billion to the State through additional taxes, dividends and royalties, according to De Beers. Apart from this the proposed arrangement will also ensure ongoing employment for Namdeb’s present employees, while creating an additional 600 jobs and other benefits and producing an extra 8 million carats of rough diamonds.

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Commenting on the new arrangement to extend the LoM of on-shore mines, De Beers CEO Bruce Cleaver said, “Namdeb, a shining example of partnership, has a proud and unique place in Namibia’s economic history,This new business plan, forged by Namdeb management and enabled by the willingness of government to find a solution in the best interest of Namibia, means that Namdeb’s future is now secure and the company is positioned to continue making a significant contribution to the Namibian economy.”

While Namdeb sources diamonds mainly from coastal gravel, its counterpart Debmarine conducts marine mining operations offshore, off the Namibian coast using shops. In the year 2020, Namibia contributed 1.4 million carats to De Beers’ total production of 25.1 million carats, and some of these offshore diamonds are among the world’s highest value and much sought-after diamonds.

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