Wednesday , April 24 2024

Namdeb seeks tax break

NAMDEB is confident that the government would grant the company tax breaks so that it extends its land-based operation beyond 2023.

Namdeb is a joint venture between the Namibian government and Anglo American’s De Beers Group, it currently pays a 10% royalty on its sales and 55% corporate tax on its profit, a level deemed high by the company.

While the Namdeb CEO, Riaan Burger acknowledged that the current arrangement is a viable one especially to new diamond operators he also indicated that it is not viable for an ageing player like Namdeb.

“While that may be conducive or viable for new diamond operators, it might not be conducive to an ageing marginal asset like Namdeb,” said Burger with confidence that government would grant the company a waiver, especially for the royalty.

“I think there is an understanding of the importance of Namdeb in the economy and in particular in terms of the jobs that are affected by the current short life of mine,” he added.

Diamond mining is reportedly the largest taxpayer in Namibia and generates 20% of the southern African country’s export earnings.

Diamonds have been mined in Namibia since 1908, but land-based operations could end in 2023 as Namdeb says it is no longer economical to continue under the current tax regime.

Anglo American results show that its land operations in Namibia produced 209,000 carats in the first six months of 2019, 37% less than the first half of last year.

Diamond prices have been under pressure this year falling on average this year an estimated 35% below 2014-17 levels, a development that has hit diamond companies across the board.

The luxury market is highly competitive whilst the diamond industry’s mid-stream cutters and polishers are finding it harder to source lending facilities as banks have fled the sector after being hit by frauds and bad loans.

It has been reported in some media sections that diamond jewellery demand is still robust with recent data showing demand for diamond jewellery rising to 2.4% last year.

In the US market, where almost half of all diamonds are sold,  is reported that the increase was 4.5%.

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