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Namibia: Govt Eyes Majority Stake in Diamonds
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New Era (Windhoek)
22 April 2008
Posted to the web 22 April 2008
Desie Heita
Windhoek
The Government is on the verge of clinching a deal with the De Beers group for a direct and significant chunk of the group's marine diamond operations in Namibia.
Once finalised, the agreement will reform the entire partnership structure on which the Government and De Beers have operated the diamond industry since the formation of Namdeb in 1994.
Presidential economic adviser, Leevi Hungamo, who is involved in the negotiations said the "negotiations are very advanced".
The negotiations will result in the creation of a new 50/50 joint venture holding company between De Beers and the Government. The yet-to-be named company will take over the ownership of Namdeb and De Beers Marine Namibia.
"The negotiations aim to restructure the whole partnership [between the Government and De Beers], including that of De Beers Marine Namibia," said Hungamo.
This new structure will give the Government more than 50 percent shares in De Beers Marine.
Currently, the Government owns an indirect 30 percent in De Beers Marine Namibia, through Namdeb the 50/50 joint venture company with De Beers group. The De Beers group directly owns the other 70 percent.
Daniel Kali, the spokesperson for De Beers group, confirmed the negotiations but said it is too early for the company to comment, as the discussions are still ongoing.
Hungamo said the discussions to restructure the partnership between the Government and De Beers started in 2006 together with the renegotiation on the five-year sales agreement as well as the shareholders agreement.
The new sale and shareholders agreement, signed between De Beers and Namibia early last year, introduced the beneficiation and value addition of Namibian diamonds in Namibia. Under that agreement, De Beers group agreed to have 16 percent of Namdeb's annual production supplied to local cutting and polishing factories through the Namibian Diamond Trading Company (NDTC). This new arrangement will last until 2013. There are currently 11 Namibian cutting and polishing factories that receive uncut diamonds from NDTC. Expectations are that the level of turnover of local beneficiation could reach up to N$2billion by 2009.
An increased shareholding in De Beers Marine Namibia will see more money flowing into the State's coffers as off-shore diamond mining operations have come to outstrip the land-based mining operations.
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De Beers Marine is currently the biggest Namibian diamond miner, with production of about 1 million carats per annum.
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