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De Beers only selling Elizabeth Bay Mine in Namibia, move to sustain operations beyond 2019

22 april 2019

david_johnson_xx.pngNamdeb Holdings, a 50/50 joint venture between the Namibian government and De Beers is not selling Daberas, Sendelingsdrift and Southern Coastal mines in the southern African country.

It had been alleged that Namdeb was planning to close and offload three mines together with the Elizabeth Bay Mine by 2022 as it searches for higher-value gemstones offshore.

However, De Beers’ senior manager for media and commercial communications, David Johnson told Rough & Polished’s Mathew Nyaungwa that Namdeb is only disposing off the Elizabeth Bay Mine, which is located 30km south of Lüderitz.

He, among other things, also spoke about their decision to move to calendar year ITOs and to allow sightholders disclose the provenance of the diamonds they purchase from the group.

Below are excerpts from the interview.  

Namdeb, a joint venture between the Namibian government and De Beers, was said to be offloading Elizabeth Bay, Daberas, Sendelingsdrift and Southern Coastal mines. Can you provide an update on this disposal of mines in Namibia?

Namdeb commenced the process of disposing its Elizabeth Bay Mine, located along the south-western coast of Namibia, in 2018. Namdeb is currently engaged with a few prospective buyers and hopes to conclude the process as soon as possible. Namdeb is not disposing of its other mining areas and they remain operational.

Why are you selling the Elizabeth Bay Mine?

We took the decision to seek a buyer for Elizabeth Bay mine to secure its long-term future. Following a review, it was concluded that the best way to secure a longer future for the mine, beyond the projected 2019 life, was to find a more suitable low-cost operator that could allow the mine to continue to contribute to Namibia and Lüderitz through continued employment and economic activity. As this mine nears the end of its current life, we have therefore been focused on seeking a buyer that can sustain operations beyond 2019, protect jobs and contribute sustainably to the Namibian economy.

Although you said Daberas, Sendelingsdrift and Southern Coastal mines were not being sold, are these mines set to close by 2022, as previously reported?

After more than a century of mining, many of the Namibian land-based operations that constitute Namdeb Diamond Corporation are in their twilight years, but Namdeb has not set any particular closure date for any of the operations mentioned and is not disposing of any operations other than Elizabeth Bay.

There is a political friction in Botswana’s ruling party pitting the current president and his predecessor. Are you concerned by such reports?

De Beers Group is not involved in any of our producer partners' politics - we have a partnership with Botswana as a nation and have always had a strong and positive relationship.

The Central African Republic recently invited De Beers to mine its diamonds. What is your comment on the invitation?

We are focused on our current portfolio and don’t have any plans to undertake any activities in the Central African Republic.

Can you provide an update on your operations in Angola?

Bruce Cleaver was invited to meet with President Lourenço in Angola to discuss the country’s diamond sector last year and had positive discussions about the future of the country’s diamond sector. While there is nothing further to report at this stage, we look forward to continuing the positive dialogue.

Can you confirm reports that De Beers will from the fourth sales cycle reduce diamonds to sightholders? If so why?

De Beers Group's production guidance for 2019 is 31-33 million carats, compared with 35.3 million carats in 2018. Voorspoed mine closed at the end of 2018, Victor mine is now depleted, and there is a temporary reduction in availability from Venetia mine as it transitions from an open pit to underground operation. These factors have led to reduced forecast rough diamond value in the coming ITO period.

Why is De Beers moving to a calendar-year intention-to-offer (ITO)?

We are moving to calendar year ITOs to align the ITO to the calendar year planning cycle. This will help to ensure better alignment of Sights within ITO periods. As such, a move to a calendar year ITO will simplify allocations across the ITO selling period.

Why did it take long for De Beers to allow sightholders to disclose the provenance of the diamonds they purchase from the company?

De Beers Group has been at the forefront of the industry’s efforts on provenance and responsible sourcing for a long time (for example through key roles in the Kimberley Process, the RJC, as well as the development of the Best Practice Principles and the focus on financial transparency and robustness). We are also currently making substantial investments in Tracr™, the end-to-end asset-tracking blockchain platform, developed by the diamond industry, for the diamond industry. Tracr will be the ultimate in provenance assurance in the long run.

De Beers Group has always provided Sightholders with the ability to provide assurance about the responsible sourcing of rough diamonds purchased from Sights through provision of an invoice statement specifying country / countries of origin (all of which – Botswana, Namibia, South Africa and Canada – are Kimberley Process compliant), as well as an invoice statement confirming that the diamonds are compliant with the Best Practice Principles.

However, some Sightholders expressed a desire also to be able to provide a corporate source of origin. As such we have recently introduced the potential for use of a "Diamonds from DTC" provenance claim for diamonds purchased from Sights.

What is the level of demand for low-quality diamonds at the moment?

There has been a challenge for smaller, lower quality rough diamonds for some time due to the global supply volumes of these types of diamonds over the last 18 months. While there remain some challenges in this area, the inventory 'indigestion' in this area is expected to ease as the year progresses.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished