Namdeb, De Beers Scale Down.
In line with De Beers' decision to scale back, the company's operations are starting to reduce production.
In South Africa, Namibia and Botswana staff levels have been reduced, most on early holiday leave, with some employees not expected to return to work after the Christmas and New Year holidays.
In Namibia, Namdeb and De Beers Marine Namibia have indicated that they will take immediate steps to reduce production for the remainder of 2008 and early 2009 in line with prevailing market conditions.
Last month, Namdeb said it was reviewing the prevailing level of demand for rough diamonds from the Diamond Trading Company (DTC).
"High inventory levels and low liquidity have combined to impact on wholesale clients' ability to purchase new rough diamond supplies, and Namdeb and De Beers Marine Namibia will take immediate steps to reduce production for the remainder of 2008 and early 2009 in line with prevailing demand," Hilifa Mbako, spokesman for Namdeb, said.
Staff retrenchments are inevitable, according to a Namdeb press statement on Friday.
Nevertheless, according to industry commentators, prices for polished diamonds remain above the levels seen at the beginning of the year. However, the wholesale market for new rough diamonds in the major cutting centres has been impacted by the global economic crisis, principally as a result of liquidity issues.
This is driving DTC's clients to correct their inventory levels, thus having a negative effect on their ability to purchase new rough diamonds.
"Across the Family of Companies in Namibia, our first priority is to the men and women working at our operations, and we will strive to minimise the impact on them through production holidays and flexible working arrangements," Mbako said.
"In addition, the long-term dynamics of the diamond industry remain strong. Diamonds are a rare and finite treasure of nature and, with future demand growth in emerging markets such as China and India, demand is likely to significantly outpace what is forecast to be lower levels of global diamond production for many years to come," he added.
To respond to this economic challenge, Namdeb, De Beers Marine Namibia, NDTC and De Beers Namibia are developing a strong action plan underpinned by three core considerations: to reduce production levels to be in line with prevailing demand from the DTC client; to minimise the negative impact on its employees, communities and Namibia at large; and to ensure that the company emerges stronger from the prevailing downturn, ready to realise the benefits of a recovered world economy.
"For De Beers Marine Namibia this will mean the vessels will be laid up in port from mid- December until early in 2009.
Namdeb will see some mine sites being reduced to one shift and stopping most operations over the festive season, and others will carry out more essential maintenance," said Mbako.
This will inevitably result in a reduction in the required number of employees, he added.
"We will consult openly and fully with any affected employees, and with the union, to ensure that we meet all the statutory requirements.
"Operations in the De Beers Family of Companies around the world are carrying out similar exercises, while trying to mitigate the impact on employees as much as possible," Mbako said.
Distributed by AllAfrica Global Media. (allafrica.com)