No dazzling half-year for Namdeb

Land operations produced 209 000 carats in the first six months of 2019, nearly 37% less than the same half-year last year.

19 July 2019 | Business

Jo-Maré Duddy



Namdeb Holdings recorded its worst first half-year since 2016, with diamond production for the six months ended 30 June plummeting by nearly 22% compared to the same period in 2018.

Production results released yesterday by Anglo American show Namdeb Holdings delivered 335 000 carats of gems in the second quarter, down 180 000 carats or nearly 35% from the same three months last year. The latest results mark the worst performance in a second quarter since 2016, when Namdeb Holdings produced 296 000 carats.

Anglo American said the matte performance was mainly driven by the land operation transitioning Elizabeth Bay into care and maintenance in the last quarter of 2018, as well as the planned maintenance for the Mafuta crawler vessel.

Namdeb Holdings' land operations produced 209 000 carats in the first six months of 2019, nearly 37% or 121 000 carats less than the same half-year last year. Debmarine Namibia produced 609 000 carats, down 105 000 carats or about 15% from a year ago.

Total production was 818 000 carats, a drop from 225 000 carats in the first six months of 2018.

Anglo American is the holding company of De Beers. De Beers and the Namibian government each own 50% of Namdeb Holdings.

The local mining giant is the worst contributor to De Beers' total production in the past half-year. Of total production of 15.551 million carats, Namdeb Holdings provided about 5.3%. In the same period in 2018, Namdeb Holdings contributed nearly 5.97% of the 17.495 million carats produced.



Outlook

Diamond mining is expected to grow by -12.5% this year, the Bank of Namibia (BoN) forecast in its latest Economic Outlook released in April. This follows positive growth of 13.7% and 12% in 2018 and 2017 respectively.

Should the BoN forecast prove to be spot-on, 2019 will record the worst contraction in diamond mining since 2009.

According to the BoN forecast, diamond mining is expected to contribute nearly N$17.4 billion at current prices to Namibia's forecast gross ­domestic product (GDP) of about N$202.8 billion. Last year, the sector's contribution was about N$18.2 billion.

Anglo said demand for rough diamonds remains subdued as a result of challenges in the midstream with higher polished inventories, and caution due to macro-economic uncertainty, including trade tensions between the US and China.

The average realised rough diamond price in the past six months was US$151 per carat, a decrease of 7% compared to the same half-year in 2018. This was driven by a 4% reduction in the average rough price index and a change in the sales mix in response to weaker conditions, Anglo said.

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