Diamond in for another bad year
posted on Mar 17, 2009 02:08AM
Gold Project: 9.39 Moz Measured and Indicated, Plus 3.5 Moz Inferred
De Beers will cope with the hard times brought on by the global financial crisis by significantly reducing output levels, costs, including jobs, and capital expenditure at its diamond mines.
Author: James Macharia
Posted: Tuesday , 17 Mar 2009
JOHANNESBURG (Reuters) -
De Beers, the world's top producer of rough diamonds, said on Monday its Namibia joint venture, Namdeb, was considering closing its mines in that country from April 1 for three months due to weak sales.
De Beers -- 45 percent held by Anglo American Plc -- has said it would cope with the hard times brought on by the global financial crisis by significantly reducing output levels, costs, including jobs, and capital expenditure at its mines.
De Beers said in February total sales for 2008 rose 1 percent to $6.9 billion.
Last month, De Beers' joint venture in Botswana, Debswana Diamond Co., also temporarily shut its mines, and De Beers is in talks with unions in South Africa to cut some 1,000 jobs.
Namdeb, owned 50-50 by Namibia's government and De Beers, was in talks with unions and other parties over the closures.
"Namdeb has put this proposal (forward) and is in discussion with unions and other parties. It is likely that if the proposal is accepted it will take effect from April 1," a spokesman for De Beers in Johannesburg told Reuters.
"For now Namdeb's mining operations continue. The mines are definitely not shut, they may be planning to do that but it may take a few weeks to implement something like that."
Namdeb's spokeswoman Ndeshi Shikwambi said the workers would be paid their salaries during the production holiday.
"Production will be halted for three months by the company in order to cut costs," she said.
"The workers will be paid as normal. We have informed the minister for mines and energy and there will be a one month notice (before the closure)."
Namdeb would not lay off workers because some workers had opted to reitre early or take retirement packages, she said.
Essential services of health, safety, environment and education nature would continue, as would maintanance work.
Three of De Beers' shareholders, including Anglo, said last month they had agreed to loan the company $500 million to help it weather the economic downturn, following muted sales in 2008.
Analysts have said the performance of De Beers, which controls around 40 percent of the rough diamond market, might worsen this year as the global economic crisis hits demand.
Debswana Diamond Co., the world's biggest diamond producing company by value, shut down all its mines until at least April 14. The Damtshaa mine and Orapa No. 2 plants will be shut for the rest of the year, Gaborone-based Debswana said.
Moody's on Thursday cut the outlook for Botswana's foreign currency rating to stable from positive citing a possible lengthy downturn in demand for diamonds, the country's main source of budget and export revenue.
(Additional reporting by Paulus Ashipala in Windhoek; editing by Sue Thomas)
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