LONDON/WINDHOEK (Reuters) - Anglo American on Thursday said its De Beers subsidiary was investing in a $468 million new offshore diamond mining ship to mine for diamonds off the coast of Namibia, with the capacity to add 500,000 carats of annual production from 2022.
The vessel is a joint venture between De Beers and the government of Namibia, which is keen to encourage foreign investment in mining as a mainstay of the economy.
The ship will be the seventh in the Debmarine Namibia joint venture’s fleet that mines the country’s high-quality diamonds from the ocean floor using hi-tech surveying equipment.
Anglo American CEO Mark Cutifani said in a statement the vessel was in line with the group’s focus on efficiency and margin and the investment offered an EBITDA (earnings before interest, tax, depreciation and amortization) margin of more than 60%.
Namibia’s Mines and Energy Minister Tom Alweendo told Reuters the government would do everything necessary “to encourage inward investment in the mining sector in such a manner that the investment is mutually beneficial to the investor and the host country.”
Some African countries have been imposing tougher conditions on international miners.
Namibia, however, has been relaxing restrictions. Last year, it said it was scrapping a requirement for companies seeking mining licenses to be partly owned and managed by black Namibians.
Mining, of which uranium and diamonds are a major part, contributed 14% of the country’s GDP in 2018, Namibia’s Chamber of Mines said.
Diamonds also accounted for 14% of Anglo American’s core profit in 2018.
The natural diamond market has been unsettled by competition from lab-grown stones and weaker values for smaller diamonds, but high-quality gems can still command a premium.
Analysts say there are signs supply is becoming tighter.
In a research note, Panmure in March said a review of its global diamond database found production growth would moderate this year and decline into 2021.
“We are not suggesting prices are going to surge,” it said. “But we believe the foundations for higher prices are now being laid, even accounting for lab-grown alternatives.”
Alweendo said he was concerned about the impact of lab-grown diamonds.
“Our only hope is that we will still be able to convince the consumers to make a distinction between natural and lab-manufactured diamonds,” he said.
Reporting by Nyasha Nyaungwa in Windhoek and Barbara Lewis in London. Editing by Jane Merriman