HomeBase MetalsNamdeb takes 3-month production holiday

Namdeb takes 3-month production holiday

Namdeb diamond mine
on the banks of the
Orange River, where
alluvial diamonds are
Windhoek, Namibia — MININGREVIEW.COM — 17 March 2009 – The Namibian Diamond Corporation (Namdeb) – a 50-50 joint venture between the Namibian government and the De Beers Group – is taking a three-month ‘production holiday’ that will temporarily bring mining activity to a halt as the company grapples with the global financial crisis.

Namdeb’s group manager for external and corporate affairs, Hilifa Mbako, told The Namibian newspaper that there had been no diamond sales in January and February, placing Namdeb’s cash flow in what he described as ‘an unfavourable position.’ He said the ‘production holiday’ was the preferred option of several considered – one of which would have entailed shortening working days.

Asked how workers will be affected, Mbako told The Namibian that they would be paid their salaries during the production holiday. “Also, not all areas will be shut down, and essential services such as the school, the hospital, the sea walls, etc [at Oranjemund] will continue to operate,” he said.

Poliverster Hangula of the Mineworkers Union of Namibia (MUN) Oranjemund branch, who was present during the consultations, says only 260 of the mining giant’s workers will remain active. He confirmed that various options had been outlined, and that workers had been invited to say which they preferred.

The Namibian says the global financial crisis has left Namdeb deeply scarred, pulling down its income levels to below 50% of the projected income for the period since September. Namdeb had already slowed down production significantly in December following dismal sales in November.

It reports that Namdeb also embarked on a voluntary retrenchment exercise in January to cut its staff by at least 600.

Workers have until Monday to apply. About 578 employees have already applied and 520 applications have been approved. According to Namdeb, 279 have received their severance packages. Sixteen applications were turned down and decisions are still pending on the remaining 42.

Asked whether the response was strong enough to stave off forced layoffs, Mbako said: “We believe we will achieve the numbers, and it appears that in the main we will have no forced retrenchments. However, there are a few positions where redeployment is unlikely, and the incumbents have chosen not to accept voluntary separation. In such cases the company will have to consider retrenchment.”

Mines and Energy Minister Erkki Nghimtina has described the Namibian diamond industry as having gone into survival mode. “It is being predicted that the whole diamond pipeline from the mines to our factories up to jewellers will be in survival mode for the rest of 2009 and for the most part of 2010,” Nghimtina said, adding that serious job losses and possible closure of some diamond cutting and polishing factories could be expected.

Last month, the De Beers joint venture in Botswana (Debswana Diamond Company) also temporarily shut its mines, and De Beers is in talks with unions in South Africa to cut some 1 000 jobs.