New Life for an Old Mine

Why would anyone invest millions of dollars reopening a diamond mine when other mines are closing, suspending operations or cutting production, when prices are weakening, when demand is under pressure, and when the outlook for the industry is, to say the least, uncertain?

And not just any mine, but Elizabeth Bay, in Namibia, which has, to say the least, something of a checkered history.

In August 2009, the global financial crisis forced owners Namdeb, the 50:50 diamond-mining joint venture between the Namibian government and De Beers, to place it on care and maintenance.

In September 2018, after reopening the mine, Namdeb again concluded it could no longer it economically, again placed it on care and maintenance, and went on to sell it two years later.

And in March 2023, the new owners, Sperrgebiet Diamond Mining, closed the mine after operating it for barely six months. It struggled financially and had the electricity supply cut off after failing to pay its bill.

This is the mine, now known as Sperrgebiet Diamond Mine, that is preparing to resume operations under a partnership between Kenzoll Capital and Namibia-registered MSF Commercials, formerly a minority shareholder in the mine.

The question is why.

The answer may lie in Kenzoll Capital and its willingness to take on a troubled asset.

It specializes in betting that fresh capital, a different operating model and opportunities overlooked by previous owners can turn such an asset into profitable businesses.

The Amsterdam-based private equity firm was founded in 2021 by Dutch investor Corne Melissen. Before his time at Kenzoll, he was involved in the rescue of Telfort, a struggling Dutch mobile operator subsequently sold to KPN, and the acquisition of HEMA, the Dutch retail chain.

Kenzoll also has some diamond history. In September 2024, it acquired the Adamastor, an offshore diamond-mining vessel, and partnered with LK Mining to develop the Hottentot Bay concession off Namibia's coast.

The company believes previous failures at Elizabeth Bay do not necessarily mean it cannot be made profitable.

Rather than simply restarting the old operation, the partnership intends to apply a different cost model, draw on its marine-mining expertise and explore for commercially viable deposits of heavy mineral sands and critical metals such as copper (for electrical wiring, power grids, motors and electronics) and tantalum (used in components, particularly for mobile phones, computers and automotive systems).

The plan combines traditional land-based diamond mining, marine-based diamond mining and, hopefully, critical minerals.

Kenzoll is putting its eggs in different baskets. The company's immediate priority is to resume diamond production, with a restart targeted for November 2026.

"Namibia has a very high gem quality for its diamonds, with 90% of its production consisting of high-value, gem-quality natural stones. These command a premium price," the company told IDEX Online this week.

It says the mine contains an estimated total of 6.3 million carats onshore and 4.2 million offshore.

"The investment will also cover exploration for critical minerals, as the mine has historically only been explored for diamonds previously.

"We are bringing our low-cost product model, using our marine technology from our mining vessels, which we're hoping will bring profitability across onshore and offshore operations."

Kenzoll says the majority of its $50 million investment budget for Namibia is targeted at Elizabeth Bay, though it is unclear how much is earmarked for the mine's immediate restart and how much for future exploration and development.

Corne Melissen, CEO of Kenzoll Capital, said: "Elizabeth Bay has spent most of the past eight years out of action and we're committed to getting the mine producing again, providing jobs and economic value to an area that has relied heavily on diamonds for over a century."

The investment is a bet that a different operating model and a broader approach to the mineral resources can succeed where previous owners failed.

But the company has not publicly disclosed new production targets, projected costs per carat or a detailed operating plan demonstrating how the mine will become profitable.

Have a fabulous weekend.