Namibia’s government has agreed that Namdeb, its diamond mining joint venture with De Beers, should halt production for up to four months because the global economic downturn has slashed demand, officials said Wednesday.
The company has had no sales since January this year, spokesman Hilifa Mbako said Wednesday.
The announcement followed a similar move earlier this month by Botswana — the world’s largest producer — which is also suffering from the rapid fall in demand for rough diamonds following years of sparkling results.
Namdeb will suspend production at its land operations for three months. But health, safety and environmental support services and maintenance work in the seawalls and other mining infrastructure will continue, Mbako said.
“We have the necessary permission to temporarily stop production … during the beginning of April,” he told The Associated Press. He said this would reduce operating costs associated with fuel and electricity.
Namdeb produces an average 1.6 million carats per year, and makes a key contribution to the economy of the sparsely population southern African nation.
Mbako said the shutdown would be from three to four months. He said that employees would be given paid leave, but trade unions disputed this saying it was far from certain that workers would receive their salaries.
The company has been cutting down on production since December, when mining was scaled down to a single shift a day from the regular double shifts. It has also scaled back its marine production and instituted voluntary layoffs.
De Beers, which controls 40 percent of the global diamond trade, says there has recently been a 20 percent drop in sales of polished diamonds.
Earlier this year, neighboring Angola called off a planned international meeting of diamond producers and dealers, saying the global financial crisis had hit the diamond industry hard.
Copyright 2009 The Associated Press.