Namdeb Returns to Profit, Sales $255 million In H1

De Beers’ Namibian diamond mining operation has recovered from last year’s slump, yet cautioned that the global economic climate remains fragile. Namdeb Diamond Corporation’s sales in the first six months of 2010 increased 22 percent to $254.8 million but the average price of diamonds plummeted 41 percent.

Namdeb’s production and sales were up in H1, but the price of sold goods dropped 41%, contrary to current industry trend of rising prices Photo: Namdeb

The 50:50 joint venture with the government of Namibia mined 795,000 carats during the period, more than double the production in the first half of 2009. About two thirds of the production, 538,000 carats, was from the company’s marine operations.

However, the increase in production and sales hides a grim reality for the company. The average value of sales dropped 40.9 percent from $542.70 per carat last year to $320.50 p/c in this year.

The company did not explain the fall in price that took place during a period of increasing rough diamond prices. According to a company report, Namdeb’s average stone size so far this year is much larger than in the January-June period of 2009 - 0.63 carats compared to 0.50 carats. The most plausible explanation is a decrease in the quality and color of the goods.

Namdeb Managing Director Inge Zaamwani-Kamwi said that while they are encouraged by increased demand in the first half of the year, the global economic climate remains fragile, especially in the important diamond markets of the U.S., Japan and Europe.

“We therefore look to the remainder of 2010 with measured optimism. With most restocking activities now largely completed, further demand growth is depended on increased consumer confidence, especially in emerging markets.”

The company posted a net profit of $35.9 million, recovering from a loss of $54.9 million.