The global diamond industry appears to be on an upward trajectory following a routing that was brought about by the economic crisis, which started late 2008. Namibia Diamond Trading Company (NDTC), a joint venture between De Beers and the Namibian government was not spared by the downturn, which saw it scaling back its operations. Rough & Polished’s Mathew Nyaungwa caught up with NDTC’s Sales and Marketing manager Brent Eiseb to find out how the diamond trader was fairing after the crisis. He also spoke on the recent extension of the current Supplier of Choice contract by one year, and beneficiation of in the southern African country, among other issues. Below are the excerpts.
Media reports have shown that diamond prices and demand had been recovering of late. What is the state of rough diamond sales in Namibia?
We have seen a marked improvement in the demand for rough diamond over the last few months. This was driven by better than expected consumer sales in Q4 of 2009. We expect to gradually increase sales as consumer demand for diamond jewellery begins to recover - driven in part by the strength of the Chinese and Indian markets. We will however continue to take a cautious and prudent approach to Namdeb’s production and NDTC’s sales levels for 2010 as the world economies emerge from a recession.
In the longer term the supply/demand dynamics of diamonds remain highly attractive. Future demand growth for diamond jewellery is expected to outpace the forecasted lower levels of diamond supply for many years to come, providing a strong base for growth.
Your mother organization DTC recently announced that all the existing sightholders will be offered a one year extension to their current three-year Supplier of Choice contracts. Has this been done in Namibia and why?
I can confirm that NDTC will also be extending the current Supplier of Choice contract by one year. The extended contract will run from 31st March 2011 to 30th March 2012. As we are all aware the past two years have been the toughest in living memory for the industry and all diamantiares, including NDTC Sightholders, are trying to manage their way out of the downturn. The decision to extend the current contract is about priorities. The Namibian cutting and polishing industry is in the process of reinvigorating itself as we emerge from the worst of the downturn and NDTC’s priority is to make sure that all the diamond organisations remain focused on this process.
NDTC currently has 11 Sightholders, is the trading company likely to add more Sightholders, given that Sightholders and non-Sightholders wishing to apply for DTC supply will be able to do so from 2011?
At this stage it is very difficult to say whether more companies will be added. All we say at this particular point is that we always review our processes before any major assessment. And while I am not implying that there will be major changes for 2012-2015, we are certainly looking to ensure that our distribution of rough diamonds remains effective, efficient and competitive and through this fully supports the beneficiation objectives of the shareholders.
How far has NDTC gone with its drive to beneficiate rough diamonds in the country?
Significant progress in this area has been made since the inception of the NDTC in 2007 with some of the key achievements including: The creation of hundreds of jobs in the diamond industry achieved through the establishment of the NDTC, and the completion of two and a half years of operations at NDTC, with over 345 million USD of rough diamonds being sold to the Sightholders of NDTC for the period October 2007 to March 2010, for the purpose of local cutting and polishing.
While excellent progress has been made to date, it should be recognized that successful and sustainable beneficiation is a long-term process. It requires solid partnerships of the type that De Beers and the DTC are experienced in establishing, with each stakeholder playing its specific and important role:
- Namibian government creating and enabling business environment;
- NDTC operations providing access to the appropriate rough diamonds;
- Sightholders showing commitment to manufacturing in Namibia.
NDTC has been encouraging jewellery design capabilities in Namibia through the Shining Light Award. What benefits do the company and the country derive from this endeavour?
The overall objective of the Shining Light Diamond Jewellery Design Competition is to create a platform for Namibian jewellery designers to showcase their design talents. The NDTC see the competition as a crucial component of beneficiation because it contributes significantly towards the broadening of skills in the Namibian jewellery design and manufacturing sector. The competition is also envisaged to contribute towards job creation for designers which further enhances the development of the diamond industry in Namibia.
Some diamond producing countries like Botswana have reported that their economies are officially out of recession. What is the state in Namibia? Has the diamond industry come out of recession in the country?
We have seen a marked improvement in the demand for rough diamonds over the last few months. This was driven by better than expected consumer sales in Q4 of 2009. We expect to gradually increase production levels, sales and prices as consumer demand for diamond jewellery begins to recover - driven in part by the strength of the Chinese and Indian market. We expect consumer demand to return to positive growth in 2010 in the USA and worldwide. However, the uncertainties surrounding the economic situation and consumer confidence in the USA, the world’s largest diamond consumer market, will continue to be a source of risk for the recovery in Namibian diamond industry.
NDTC recently indicated that it traded rough diamonds to its sightholders worth over 345 million USD between October 2007 and March this year. Can you provide details as to the volume and value of rough traded so far this year?
We are not in a position to share this information with you.
NDTC used to sort over 1 million carats of diamonds from Namdeb annually, how many carats were received last year and what is your projection this year?
NDTC sorted approximately 1 million carats during 2009 and whilst production is planned to increase over 2009 levels. Namdeb’s production is not expected to return to historic highs for the foreseeable future because consumer demand for luxury goods has not yet fully recovered to pre-crisis levels. Namdeb will therefore continue to take a prudent approach to production in 2010.
Mathew Nyaungwa, Rough&Polished, from Namibia
