De Beers Reaches 20-Year Deal with Namibia

RAPAPORT... De Beers' joint venture with the Namibian government has secured a new long-term business plan that will generate an extra 20 years of production from the country's land-based mining operations.Namdeb's land operations were due to finish their life span at the end of 2022 because of "unsustainable economics," De Beers said Thursday. However, a "series of positive engagements" between Namdeb's management team and the Namibian government has enabled a new plan that extends mining through 2042, it explained. "It was imperative to safeguard this operation for the benefit of sustaining the life of mine for both the national economy as well as preserving employment for our people and the livelihoods of families that depend on it," commented Tom Alweendo, Namibia's minister of mines and energy.Under the new blueprint, the government will reduce the royalties it charges Namdeb from 10% to 5% for the period from 2021 and 2025. This enables the company to extend mining in an economically sustainable way, while also giving around NAD 40 billion ($2.71 billion) to the state through additional taxes, dividends and royalties, De Beers noted.It will also enable ongoing employment for Namdeb's existing employees, while creating 600 additional jobs and other benefits, the miner estimated. The extra rough-diamond production will be some 8 million carats, it added."Namdeb, a shining example of partnership, has a proud and unique place in Namibia's economic history," said De Beers CEO Bruce Cleaver. "This new business plan, forged by Namdeb management and enabled by the willingness of government to find a solution in the best interest of Namibia, means that Namdeb's future is now secure and the company is positioned to continue making a significant contribution to the Namibian economy."Namdeb, a 50:50 partnership, sources diamonds mainly from coastal gravel. In addition to land-based operations, De Beers conducts marine mining off the African country's coast using ships.The country contributed 1.4 million carats to De Beers' total production of 25.1 million carats in 2020, and is home to some of the world's highest-value rough.Image: Two Namdeb employees by the conveyor belt at a processing plant. (Ben Perry /Armoury Films/De Beers)