Namdeb seeks State recapitalisation as diamond prices erode revenue

Namdeb Holdings, comprising Namdeb and Debmarine Namibia, has approached the Namibian government for financial assistance as falling global diamond prices cut into revenue, The Namibian reports.

Finance Minister Ericah Shafudah told civil society that the two diamond companies are seeking relief. 

"This is the sector we have known for many years. At one point, you could even get N$5 billion ($303 million) a year from the diamond sector. Now, the two companies are seeking relief," she said, noting the government is a 50:50 shareholder with De Beers.

Shafudah said Namdeb Holdings proposed recapitalisation in September, though the proposal is not finalised and the amount required is unknown. 

In the 2024/25 financial year, diamond mining companies contributed N$239 million ($14.5 million) in corporate tax and N$1.16 billion ($70.4 million) in royalties.

Namdeb chief executive Riaan Burger said revenue is 60% lower than predicted, wiping out nearly N$13 billion ($788 million) of the company's net present value. 

Board chairperson Alex Gawanab confirmed the sustained low-price period has pressured the company, with discussions occurring at a high level.

Economics professor Roman Grynberg said diamonds are a semi-precious* stone whose value depended on De Beers' monopoly two decades ago, and that a future remains only for large, high-quality stones. 

Economist Nghiinomenwa Erastus said recapitalisation requires shareholders to top up capital, but the government can utilise various options beyond normal shareholder means.

Mathew Nyaungwa, Editor-In-Chief, Rough & Polished

* Editorial comment: 

But without De Beers, there would be no market for diamonds, which are produced by the tonne and, based on natural availability, should be considered as nothing more than a semi-precious stone. mg.co.za