Namibia diamond output jumps as demand recovers

| Friday June 25, 2010 00:00

Production between January and May 2010 reached 580, 000 ct, compared to 929, 006 ct for the whole of 2009, figures released by the Ministry of Mines and Energy showed, a 102 percent jump from the same period last year.

Diamond mining came to a virtual standstill in early 2009 as the industry announced a 'production holiday' reeling under the impact of the global recession. Production in the first quarter of 2010 was 298, 000 ct, a 2,9 percent increase compared to the last quarter of 2009 and a 138,1 percent  rise compared to the same period last year.

'If current production levels continue during the remainder of the year, total diamond production could reach a respectable 1,4-million carats, an increase of 48 percent over 2009,' commented Bank Windhoek economist, John Steytler. Steytler is skeptical diamond production will recover to historic 2007 levels, when 1,1-million carats were mined in the first five months.

'It is doubtful that production will ever return to pre-crisis levels due to the depletion of the onshore resource,' he said.

Diamond sales over the first quarter of 2010 numbered 239,000 carats, 193% above the same period last year.

Sales in April and May were 216, 000 ct, bringing total carats sold for the first five months of 2010 to 455, 000.

While sales between January and March 2010 dropped by 6,2 percent compared to the previous quarter, the value of diamonds was up by 13,4 percent . As a result, sales in the first quarter were 951-million Namibian dollars compared to N$838-million in the last three months of 2009, signalling a recovery in diamond prices. Diamond royalties increased by about 12,8 percent to N$86-million during the final quarter of 2009.

Compared to the corresponding quarter of 2009, diamond royalties rose by 169 percent during the first quarter of 2010.'This sharp increase over the year is still far off the pre-crisis first quarter average of (N$117-million),' said Steytler. 'However, this still represents a welcome inflow into government coffers during a year when SACU receipts have reduced significantly.'-(Reuters)