Global Policy Forum

Diamonds Dominate Namibia's Economy

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African Recovery
April 1999

Namibia's economy is heavily dependent on mining, which contributed an average 21.5 per cent annually to GDP in 1991-95.

In 1997, revenue from the export of metals was $793 mn, or 56.9 per cent of total export earnings, of which diamonds contributed $552 mn, or 40.6 percent. But after 80 years of exploitation, the diamond industry is having to face up to a new challenge -- the stones are getting harder to find. Nevertheless, the country remains the world's fifth largest producer of diamonds.

The Namibian Chamber of Mines reports that the number of carats per 100 tonnes of gravel fell from almost 7.6 in 1987 to some 2.7 in 1997. Furthermore, inland deposits "could be depleted within the next 10 to 20 years," notes the Bank of Namibia's 1997 annual report.

However, the industry is stretching its operations offshore. Today, Namibia is the only country that mines diamonds from the seabed. Some 29.000 carats, or 4 per cent of total diamond output, were recovered offshore in 1990, rising to 623,000 carats, or 44 percent of total output in 1997. "If the expansion plans of the diamond producers are successful, offshore output is expected to surge to 1.27 mn carats in 1999 and 1.60 mn in 2000, says the Bank of Namibia.

Namibia is expected to increase its total diamond production from an estimated 1.4 mn carats in 1997 to 2.2 mn carats a year by 2000, according to the Bank of Namibia.

Much of Namibia's diamond trade is in the hands of De Beers, which mines half of the world's diamonds -- in Namibia, Botswana and South Africa -- and in the past controlled up to 80 per cent of the global diamond market, worth around $50 bn in 1997. However, the Russians are encroaching on De Beers' territory in Southern Africa. Looking at the long-term, Russian engineers are preparing to start a $15-20 mn geological hunt for diamonds in Namibia, near the Kalahari Desert, on the Botswana border, and a $150 mn search under the sea, on the continental shelf. Russia's largest producer and exporter of rough diamonds, Alrosa, is planning a major joint-venture investment in undersea mining of diamonds in Namibia.


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