Bank of Namibia revises diamond sector contraction estimate
The Bank of
Namibia is now expecting the country’s diamond mining sector to decline by
14.7% in real terms during 2020.
The central bank said in its latest economic outlook update that the 14.7% contraction estimated for 2020 represents an improvement from a deeper contraction of 24.7% during August 2020.
“The revision is based on the latest production estimates, where mining is expected to continue during 2020 despite challenges faced in making sales,” said the central bank.
This year’s decline of Namibia’s diamond mining sector is due to the fall in global demand, compounded by an interruption in logistics for holding sales auctions due to travel restrictions and lockdowns around the world, necessitated by the outbreak of COVID-19.
“Diamonds are part of luxury items, and consumers have shifted more of their focus on necessities during 2020 as their incomes were negatively affected through wage reductions, retrenchments, and slow business activities,” said the Bank of Namibia.
Namdeb Holdings, a joint venture between the Namibian government and De Beers, registered a production decline of 43% to 200 000 carats in the third quarter of 2020 as the marine fleet suspended production for part of the quarter to reflect lower demand and one vessel was in dock for planned maintenance during the period.
Meanwhile, the Bank of Namibia is expecting the local diamond industry to register a moderate recovery next year with a growth rate of 2.8%. The industry is also projected to record a 16.9% growth in 2022. Factors that will drive the recovery were not provided.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished