DIAMOND mining, hailed as one of the main vehicles to drive Namibia out of recession this year, produced 2,9 per cent more carats in the first quarter of 2010 than in the last quarter of 2009.
The Bank of Namibia (BoN) expects diamond mining to recover from its 58 per cent contraction last year and to grow by 18,8 per cent this year. This recovery is expected to contribute significantly to the expected 4,2 per cent economic growth the central bank is bargaining on this year.
Confirming the first quarter figures by the Ministry of Mines and Energy, Old Mutual Namibia Group Economist Robin Sherbourne however said that carat sales dropped by 6,2 per cent compared to the last three months of 2009.
He forecasted a total production on 1,2 million carats for 2010.
Also believing that diamonds will put the shine back into the local economy, Bank Windhoek's newly appointed economist, John Steytler, said "economic growth in the coming year will be supported by a rebound in diamond production, an expansionary budget and a lower interest environment".
In its recently released annual report, the BoN said that diamond production in the short to medium term, will "continue to underperform due to the depletion of onshore diamonds, since only an average of 33 per cent of total production is expected from land operations". The bank expects diamond production to contract again by 0,1 per cent next year.
The expected rise in production in 2010 is much lower than levels achieved in 2006 and 2007, when 2,4 million carats and 2,3 carats were mined respectively. In 2008, a total of 2,22 million carats were produced, before slumping to 929 006 carats last year.
The BoN stressed that depressed global demand due to the worldwide financial crisis was not the only reason for the drastic fall in production in 2009. Namdeb had already decided in 2007 to shrink production, "as onshore diamonds systematically began to be depleted.
"However, the global crisis exacerbated the situation, as the United States, the single largest market for diamonds, was severely hit by the credit crunch," the BoN said.
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