The president of Namibia’s central bank, Johannes !Gawaxab, called on Wednesday (15) for an extension of the reduced diamond mining royalty rates granted to Namdeb, in order to help the diamond producer weather a prolonged downturn in the global market — one marked by declining demand and oversupply.
According to Reuters, the growing popularity of lab-grown diamonds and shifting preferences among younger consumers — who are increasingly moving away from natural gemstones — have also put downward pressure on rough diamond prices.
In 2021, Namibia reduced its diamond royalty rate from 10% to 5% until 2025 to assist Namdeb, a joint venture between De Beers and the Namibian government, in extending its onshore mining operations until 2042.
“It is important to support Namdeb during these difficult times,” said !Gawaxab during a press conference following the central bank’s decision to cut interest rates by 25 basis points to support Namibia’s weakened economy. “As a country, it’s vital that we support not only companies but also their employees,” he added.
The extension of the royalty rate reduction would give Namdeb the necessary breathing room to withstand the economic storm currently hitting the country’s diamond sector.
At the time the concession was granted, De Beers argued that the age of the mines made it increasingly difficult to maintain viable and profitable operations.
“National diamond mining companies continue to face financial challenges due to debt obligations, declining revenues, and significant investments required to enhance efficiency. As a result, the sector is expected to face headwinds in the medium term,” concluded !Gawaxab.
Source: Diário Económico
