Local diamonds lose lustre
THE diamond sector is facing a significant challenge of low international demand. Coupled with a G7 decision to route all diamonds through Belgium, this poses a serious risk to the well-being of Namibia’s diamond mining sector.
This is according to mines and energy minister Tom Alweendo.
Mining remains Namibia’s leading economic sector, accounting for roughly 10% of the gross domestic product. Diamond mining has historically been the leading sub-sector of the domestic mining industry.
“For some time now, the demand for unpolished diamonds in some of the significant demand centres, such as India and China has slowed down. This has exerted downward pressure on the prices. We are also faced with a potential risk where the G7 countries require that all rough and polished diamonds destined for their markets be routed through Antwerp, Belgium,” said Alweendo this week in the National Assembly while motivating his ministry’s budget.
The G7 is an inter-governmental organisation of the seven largest industrialised economies in the world who meet regularly, mainly to discuss economic and monetary issues. Alweendo noted that if the G7 decision is implemented as is, it will curtail Namibia’s freedom to choose where to export diamonds, increase costs and, in the process, reduce Namibia’s competitiveness in the international market. Namibia is now engaging G7 countries to reconsider the decision, he said.
For the 2024-25 financial year, the mines and energy ministry has been allocated N$23.4 million to protect and promote domestic diamond resources through sound regulatory oversight and inspection across the diamond value chains.
This is primarily due to unfavourable diamond prices, resulting from weaker consumer and retailer demand in key markets, which depressed domestic diamond production.
According to the International Diamond Exchange price index, there has been an 18.2% decrease, with the index averaging approximately 97.42 points.
“The weakening consumer demand for polished diamonds in the US and China contributed to the downturn in the diamond market. The US, which represents the largest market in the industry, faced challenges due to increasing inflationary pressure. Additionally,
China, a key growth market, experienced a real estate crisis that negatively impacted consumer confidence,” reads the central bank report.
Furthermore, the Bank of Namib ia stated the global diamond market faced an oversupply issue.
To exacerbate the situation, the laboratory-grown diamond industry made significant advancements in certain crucial sectors, thus constituting formidable competition for the natural diamond sector.
Domestic diamond export earnings increased during 2023, reflecting higher volumes exported as well as the depreciation of the local currency.