October 4, 2008

Namibia: Onshore Diamond Production Decreases; Mine Planning to Extend Lifespan

Text of report by state-owned Namibian newspaper New Era website on 3 October

[Report by Desie Heita: "Onshore Diamond Production Down"]

The eventuality of a decrease in one of Namibia's major sources of income is increasingly becoming a reality with the onshore diamond production continuing to decline.

Although Namdeb, the country's largest diamond miner, is currently engaged in plans to infuse and extend the lifespan of land- based diamond mining, the reserve bank says these are just plans.

"It will take time to see if the plans do actually work," said the Director of Research at Bank of Namibia, John Steytler.

During the second quarter of 2008, diamond production decreased by 7.3 per cent to 516 059 carats.

Diamond mining activities represented about 6 per cent of the country's Gross Domestic Product, pumping nearly N$3 billion into the State coffers.

Government is also preparing for the eventuality that land mining operation ceases and has asked for an increased stake in De Beers Marine Namibia, in which it holds only 15 per cent through Namdeb. Government wants a 50 per cent stake and the two parties are currently engaged in negotiations.

Namdeb's offshore contractors continue to produce more diamonds than Namdeb's onshore mining operations. Equally, the combined outputs of other onshore diamond producers continue to decline substantially.

Namdeb, a 50/50 joint venture between the Government and the Bank of Namibia, has been sounding alarm for the past decade that its land mining operations are drying up. Current estimates for land- based diamond deposits give a lifespan of another 12 years up to 2020, after which it may have to eventually pull out of the Oranjemund land mining area.

Plans are under way to look for the best option to continue with land mining operations. One is Mining Area 1, that covers the beach area which Namdeb has in the past thought is impossible to mine, and the other is to mine the entire breadth of Namdeb's seven mining areas from Mining Area 1, including Elizabeth Bay Mine, all the way through to Luderitz. This project would mine both the beach areas, as well as shallow and mid-water portions of the land.

Pre-feasibility studies are currently under way.

Diamond production aside, the entire mining sector also experienced mixed results during the second quarter. Production of copper blister declined marginally to lowest levels last seen in 2005, to 3 787 tonnes, due to the refurbishment of Furnace 1 at the copper smelter in Tsumeb.

However, gold production increased by 6.5 per cent, refined zinc went up 23 per cent and uranium production increased by 6.4 per cent.

Gold production was pushed up by investment in heavy mining equipment, while a stable supply of energy helped to put zinc production back to its usual high production volumes.

The increase in uranium production is due to the increase in production by Langer Heinrich.

Originally published by New Era website, Windhoek, in English 3 Oct 08.

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