High Cost of Extraction Pushes Up Price of Namibian Rough Diamonds

Mining and Exploration
31/07/2017 09:50

Namibian rough diamonds are known for their high quality; mining these quality goods also costs a premium. According to De Beers Interim Financial Results for 2017, Namibian diamonds sold for an average of US$568 (N$7,383) per carat, which is 264% higher than De Beers average price per carat earned across its total operations (US$156 per carat); meanwhile, the average mining cost per carat of US$237 (N$3,080) per carat, for production volumes of 863,000 carats, was a full 276% higher than De Beers' average production cost in the first half of 2017 (US$63). “They are higher-quality diamonds than the average. They are beautiful diamonds, and we are very happy with them. But they are much more expensive to mine than everywhere else,” Cleaver stated.

In the first half of 2017, production at Namdeb Holdings increased by 17% to 0.9 million carats (H1 2016: 0.7 million carats), mainly due to production recovering following Debmarine Namibia’s Mafuta vessel having been on extended planned in-port maintenance in Q2 2016. Debmarine Namibia’s new exploration and sampling vessel, the SS Nujoma, was officially inaugurated in June 2017 and is now fully operational. Regarding the SS Nujoma exploration vessel, Cleaver told The Namibian its use will not directly contribute to an increase in diamond production volumes, but that it will allow De Beers to mine the resource more efficiently and for a longer period. He added that the vessel does not mine diamonds, but goes in front of the mining vessel, and based on the samples it takes, decisions can be made on the best and correct areas to mine. “It allows data for the samples to be processed fast enough for us to put another ship out to sea, and that could lead to more production. It will just lead to much more sustainable and profitable production,” Cleaver noted.

Called the world’s largest and most advanced diamond exploration and sampling vessel, the mv SS Nujoma, costing in US$157 million (N$2.3 billion), will enable Debmarine Namibia, a 50/50 joint venture between the Government of the Republic of Namibia and De Beers Group, to explore diamond deposits and secure diamond supply in the country well into the future. Debmarine Namibia is the only company in the world to mine diamonds offshore, having started in 2002. The company produced around 1.2 million carats in 2016, and appears certain to far outstrip that amount this year.