NAMDEB, a joint venture between the Namibian government and Anglo American’s De Beers Group, was in talks with the government about tax breaks to extend its land-based operations beyond 2023, said Reuters.
Namdeb currently pays a 10% royalty on its sales and 55% corporate tax on its profit, a level Reuters said was deemed high by the company.
“While that may be conducive or viable for new diamond operators, it might not be conducive to an ageing marginal asset like Namdeb,” said Namdeb CEO, Riaan Burger. He was confident government would grant the company a waiver, especially for the royalty.
“I think there is an understanding of the importance of Namdeb in the economy and in particular in terms of the jobs that are affected by the current short life of mine,” he said.
Diamond mining is the largest taxpayer in Namibia and generates 20% of the southern African country’s export earnings, said Reuters. Diamonds have been mined in Namibia since 1908, but land-based operations could end in 2023 as Namdeb says it is no longer economical to continue under the current tax regime.
Anglo American results show that its land operations in Namibia produced 209,000 carats in the first six months of 2019, 37% less than the first half of last year.
Diamond prices have been under pressure this year falling on average this year an estimated 35% below 2014-17 levels, a development that has hit diamond companies across the board.
The luxury market is highly competitive whilst the diamond industry’s mid-stream cutters and polishers are finding it harder to source lending facilities as banks have fled the sector after being hit by frauds and bad loans.
Diamond jewellery demand, however, is still robust. Recent data showed demand for diamond jewellery rose 2.4% last year. In the US market, where almost half of all diamonds are sold, the increase was 4.5%, said Bloomberg News.
