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24 february 2015

isak_katali_xx.jpgDe Beers and the Namibian government have been negotiating over a new diamond-sales agreement for quite some time now.

The envisaged new deal would replace a 2007 agreement that allowed De Beers to sell the stones through the Namibia Diamond Trading Company (NDTC), a joint venture between Windhoek and De Beers.

NDTC sorts and values all the gems produced by Namdeb also a mining joint venture between Namibia and De Beers.

It sells more than 10 percent of diamonds produced by Namdeb to 11 Namibian sightholders, and the rest to De Beers.

The current sales agreement initially expired end of 2013, but had been extended since then until the talks are concluded.

Namibia’s mines and energy minister Isak Katali told Rough & Polished’s Mathew Nyaungwa on the sidelines of a mining conference in Cape Town recently that the negotiations are now envisaged to end in June this year, if not earlier.

The southern African country, buoyed by Botswana’s success, was eyeing to independently sell part of diamonds produced by Namdeb.

Katali said Namibia wanted good quality stones for the local cutters and polishers.

Below are the excerpts.

What is the latest on your country’s negotiations with De Beers over a new diamond-sales deal?

The negotiations are still on, we have not yet finalised them, but I think there are many positive elements from those negotiations. [However], I won’t be able to tell you the details before we finalise everything.

What is it exactly that Namibia is looking forward to?

Namibia is looking forward to at least having some of the diamonds being marketed locally so that we will be able also to supply to the beneficiation companies that are in the country, those that are cutting and polishing diamonds so that we can have some of the diamonds and also for Namibians to start learning how to market their commodities.

Do you have any new dates when you are expected to end the negotiations?

I think we have up to June this year to finalise everything, but we might finalise earlier.

What happens when the negotiating teams reach a deadlock?

There are machanisms [that were put in place] to deal with a deadlock. If there is any, we will deal with it. 

What has been the appetite for local diamonds by local manufacturers?

They want certain types of diamonds, the big [stones] for example, the bigger carats, which has always been going to De Beers and also the type of diamonds that are good for their cutting and polishing equipment. That has not been forthcoming since we have that [sales] arrangement.

Licenses for some De Beers sightholders, including those in Namibia are expiring next month. Some sightholders are reportedly edgy, as you are taking long to complete your talks. Is there any reason for them to worry?

No, there is no correlation between the licencing and the negotiations. The licencing is a different regime and it will continue as usual, sightholders will apply and then they will be booked through the [usual] criteria and the ones that pass the test will go through [notwithstanding] the outcome of the negotiations.

What is Namibia doing to promote diamond beneficiation in the country?

We are encouraging the companies to set up factories in Namibia. This is what we are also trying to do through the negotiations in order for us to have a leverage to supply our local manufacturers. So that is an incentive to give them enough of what they may need.

Are there any prospects of finding new diamond deposits as I heard you talking about land-based operations depleting during your presentation to the indaba?    

Well probably not at the magnitude as those diamonds that we already have but the prospect of [finding] diamonds will be in the inner shore because we have a technology of pushing the sea in and then we mine and leave. We also have the technology in the deeper sea where we are using the vessels to recover the diamonds on the bottom of the sea, but then there in-between we still don’t have the technology so we are looking to find the technology that will be able to mine in the shallow waters and we believe that if diamonds have been pushed to the land and is still in the deeper sea there is no reason for us to believe that in the middle there will also be diamonds.

Finally, what is your probable revenue this year from diamond mining?

It’s about $1 billion.

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