NAMIBIA AND DIAMONDS

NAMIBIA AND DIAMONDS

A thriving economy

By: Joe Goldberg and Chris Martin

INTRODUCTION

Diamonds are an extremely important part of Namibia’s economy and have been for quite some time, and that is why we chose to do our project on the impact that diamonds have had on Namibia’s economy. As we were doing our research we saw that Namibia is one of world's two largest producers of diamonds and that they contribute for up to 50% of all the export earnings. With that in mind and the fact that we both were interested in diamonds and how they contribute to a country’s economy, we decided to do our project on this very rich and illustrious gem and what it means to the country of Namibia.

Revenue from the export of metals is $793 million, or 56.9 % of total export earnings, of which diamonds contribute $552 million. Much of Namibia's diamond trade is in the hands of De Beers, which mines half of the world's diamonds. The diamonds mined in Namibia, Botswana and South Africa control up to 80 per cent of the global diamond market, worth around $50 billion. Total diamond output was 1,495,245 ct in 2001, down 3.7% on the 1,552,591 ct produced in the previous year and offshore mining is expected to increase overall marine output this year to over 900,000 carats LE up by some 150,000 carats compared to 2001 which should bring total output up. De Beers Marine Namibia (DBMN) and Namibian Minerals Corp. (Namco) are the two biggest diamond mining corporations in Namibia and account for 90 per cent of the mining.

HOW DIAMONDS ARE MADE

Diamonds are a crystalline form of ordinary carbon created under conditions of extreme pressure and temperature. In nature, such conditions are only found deep below the earth’s surface in the lower crusts or upper mantle. Under certain circumstances in the past (usually associated with tectonic activity) the rock matrix in which diamonds occurred was subjected to such great pressure that it became fluid and welled up to the earth’s surface in a volcanic pipe of fluidized material. The pipes are correctly termed kimberlite pipes, and occur throughout southern Africa from the Cape to Zaire. Namibia’s diamonds derive not from primary kimberlite pipes, but from secondary diamond deposits – areas where diamonds have been washed down and deposited by old rivers, which have eroded kimberlite pipes in the interior on their way.

The economy is heavily dependent on the extraction and processing of minerals for export. Rich alluvial diamond deposits make Namibia a primary source for gem-quality diamonds. Namibia exports diamonds to several countries including UK, South Africa, France, Japan, and Spain.

In recent news

Despite more than a century of diamond mining in Namibia too many citizens have been denied their fair share of benefits from, and control over, the country diamond wealth. Also, many rich investors are buying the diamond mining licenses from locals for as much as $1 million, so Namibia is planning to change the way it hands out diamond licenses because people are using them as a way to get rich quick. The Namibian newspaper reported that the government would stop giving the licenses to formerly disadvantaged people after it was found that many were selling their concessions to rich investors, for more on this story, check out:

The Namibian Newspaper.

RECOMMENDATIONS

After researching Namibia’s diamond industry, we have found that it is a good idea for the government to regulate the diamond industry so that it will benefit all of the citizens of Namibia. It is such a valuable resource, so it is important to provide for better regulation which would prevent foreign investors from coming in and taking all of the profit. It is important for the economy of Namibia to continue to stay on top of all the recent news as it pertains to the diamond industry. If Namibia’s diamond industry is going to continue to prosper in the future, then they need to make sure to preserve the land, beaches and mines.

BIBLIOGRAPHY

E-Journal- Factiva™, Africa Analysis - Namibia's diamond deal, Financial Times Information Ltd - Asia Africa Intelligence Wire All Material Subject to Copyright Africa Analysis (c) 2002 All Rights Reserved, 19 November 2002.

http://www.cia.gov/cia/publications/factbook/geos/wa.html

http://www.innamibia.com/travel/HisGeoPeop/geograph.htm

http://www.un.org/ecosocdev/geninfo/afrec/vol12no4/namibxs.htm