18 Nov 2024
Bank of Namibia Warns Economic Risks as Diamond Production Declines Persist into 2024
The Bank of Namibia has cautioned that ongoing challenges in the country’s mining sector, particularly in the diamond industry, could persist beyond 2024, posing risks to economic growth.
Kazembire Zemburuka, the bank’s director of strategic communications and international relations, said the sector has been grappling with reduced production volumes and declining international diamond prices, which have hampered GDP growth in 2024 and are projected to continue impacting the economy in the coming years.
“The challenges facing the diamond mining industry are largely external, including low global demand, increased competition from lab-grown diamonds, and discounted pricing by diamond companies under international sanctions,” Zemburuka said.
He noted that as a small and open economy, Namibia has limited ability to influence global market trends.
In response, the Bank of Namibia has implemented measures to cushion the economy against these pressures.
“The Monetary Policy Committee (MPC) reduced interest rates during its last two meetings in August and October 2024, aiming to support the domestic economy while safeguarding the currency peg between the Namibia Dollar and the South African Rand,” Zemburuka added.
The warnings come amid a 14% drop in Namibia’s diamond production during the third quarter of 2024, with total output reaching 0.5 million carats.
De Beers Group attributed the decline to strategic production cuts at Debmarine Namibia, aimed at aligning output with current market conditions.
“Production in Namibia decreased by 14% to 0.5 million carats, reflecting intentional action to lower production at Debmarine Namibia, partially offset by planned higher-grade mining and better recoveries at Namdeb,” the company said.
Debmarine, the offshore arm of De Beers, saw production fall 30% year-on-year in Q3 2024, delivering 298,000 carats compared to 423,000 carats during the same period in 2023. This also marked a 30% decline from Q2 2024’s output of 427,000 carats. Year-to-date, Debmarine has produced 1.23 million carats in 2024.
In contrast, Namdeb, the land-based operation of De Beers, recorded a 48% year-on-year increase in Q3 2024 production, reaching 158,000 carats, up from 107,000 carats in Q3 2023. Compared to Q2 2024, Namdeb’s output rose by 18%. Its year-to-date production for 2024 stands at 420,000 carats.
Overall, Namibia’s diamond production for Q3 2024 totalled 456,000 carats, a 14% decrease from the 530,000 carats produced in Q3 2023 and a 19% drop from the 561,000 carats produced in Q2 2024.
Year-to-date, the country has produced 1.65 million carats, down 6% from the 1.76 million carats recorded during the same period in 2023.
Globally, De Beers Group reported a 25% decline in rough diamond production in Q3 2024, with output totalling 5.6 million carats.