Observer Money (OM): Describe the year 2023 in terms of the business environment?
Riaan Burger, Namdeb CEO (RB): 2023 has been a challenging yet progressive year for Namdeb. Following the announcement of our Long-term plan (LTP) in 2021, it was important to drive an implementation strategy that would ensure delivery. As a result, we devised a ramp-up plan with a focus on the Southern Coastal Mine operation, which is Namdeb’s mainstay and future. This ramp-up plan meant that we increased our mining capacity with a holistic view of the operations from mining, treatment as well as the machinery and equipment required to support the increased activity. Over this period, we successfully increased our bedrock area from 800 000 square meters/annum to approximately 1.4 million square meters per annum.
This resulted in a 60 percent mining capacity increase and an increase from five to eight mining faces. This also contributed to additional employment and hence the refurbishment and construction of new accommodation units for employees and contractors.
To support the increased mining scale, we also extended the main treatment plant to introduce an Alternative Feed Stream (AFS). Another key milestone in relation to implementing the LTP was the onboarding of a new mining contractor, B&E Namibia, to provide additional mining services.
The Namdeb team’s resilience and dedication has been incredible and remains the anchor of our business. This is evidenced in the achievement of operational production targets in parallel with ramping up. Most remarkable was that we were able to exceed one million square meters of area mined for the first time in history during the year. The value of natural diamonds is heavily influenced by consumer perceptions and expectations for these luxury goods to contribute to the global Environmental, social and governance (ESG) goals. As such Namdeb is committed to an ambitious objective of becoming carbon-neutral by 2030.
In essence, we know that we will only be viable in future if we can accelerate our journey to become carbon neutral. We made great strides in 2023 with the establishment of a site approximately 45 km north of Oranjemund within the Southern Coastal Mine (Mining License 43) for a wind energy facility (WEF), with the capacity of replacing up to 50 percent of the current high-carbon electricity footprint.
To complement the wind farm and reduce reliance on fossil fuels, Namdeb has also successfully completed the installation and commissioning of a roof top solar PV system to supply its main office block and the IT buildings in Oranjemund. The company aims to extend this to other buildings and possibly establish a larger solar plant. The procurement of the battery-electric forklift and Namibia’s first battery-electric bus aligns to Namdeb’s value of sustainability and the company’s carbon neutrality goal through reducing overall diesel and electricity consumption. In addition, we are assessing opportunities for electrifying existing diesel operations, investigating alternative green fuels, and researching nature-based carbon capture solutions within the Namdeb mining sites.
Aligned to our commitment of the Oranjemund town transformation strategy, we have continued to play our role of providing the necessary funding required to diversify the economy of the town. We would also like to acknowledge the role of other key stakeholders contributing to this strategy such as the Oranjemund Town Council (OTC), OMDis (OMDis Town Transform Agency of Oranjemund and OMD2030 (OMD 2030 is an Independent Community Association formed to represent the community of Oranjemund). It is indeed pleasing to see the increased activities in the town, with OTC having built roads, a new waste dump, fire station, etc. There is also other new developments and opportunities which are all positive indicators that there is collaboration that is enabling a sustainable and socio-economic development of the Oranjemund town.
Finally, we successfully launched the new Namdeb strategy which is paramount to a sustainable future for Namdeb. This strategy acts as the ‘guiding star’ to where we want to go as a business and allows us to define a narrative aligned to our new purpose of ‘Mining for Good.’
OM: What was the biggest challenge that Namdeb faced in 2023?
RB: It has been a tough year, the diamond market trends have not been showing improvements and the market continues to experience uncertainty caused by a decrease in consumer demand, high diamond stock levels and increased lab-grown diamonds (LGD’s) production. The outlook remains challenging and requires Namdeb to reposition our plans to continue enabling our long-term future, through a response
that strengthens our position to absorb the market shocks and respond accordingly to the subdued market. At the same time, we need to continue building on our positive legacy whilst creating a business that is robust, innovative and implement sustainable mining practices that contribute to achieving our sustainability ambitions.
A significant worrisome factor is that LGD’s have continued to grow, albeit that there are indications that the strategy to counter that threat is starting to pay off. This is why we continue to place emphasis on demonstrating the important role that natural diamonds play in a socio-economic context and in particular what Namibian diamonds do for our communities and country. We contribute to this by serving as natural diamond ambassadors and openly sharing our stories, that demonstrate the positive impact that natural diamonds continue to have. That is why, at Namdeb, we have adopted the De Beers Group Building Forever (BF) Sustainability Framework, which contributes to enhancing trust in natural diamonds as we support a brighter future through sustainable and meaningful ways, whilst ensuring a lasting positive legacy long after the last diamond has been recovered.
BF consists of 12 goals organised around four pillars: leading ethical practices, partnering for thriving communities, protecting the natural world, and accelerating equal opportunities. These pillars are important to our company because the work we do to achieve them is in line with Namibian national development plans and the UN Sustainable Development Goals (SDGs). The successful completion of Namdeb’s life of mine extensions provides an opportunity to further enrich our narrative of the good
that natural diamonds do, thereby increasing their desirability in a way that speaks to the hearts of consumer expectations.
OM: What is the company looking to achieve in 2024?
RB: In 2024, Namdeb is looking to build on the good foundation set in the past two years with ramp-up. In particular, we are looking to improve the business by pursuing improvement initiatives that will reduce unit cost. In addition, we will be exploring new technologies that will improve the efficiencies of our highest cost driver activities to attain a significant cost saving over life when compared to the 2023 business plan.
The increased margins will ensure that we remain a sustainably profitable business into the future and allow us to withstand the inevitable market fluctuations.
In the community, we will continue our efforts towards ensuring a sustainable Oranjemund town as we seek to diversity the local economy and create other industries. As such, we will continue to partner for thriving communities to provide the necessary support to stakeholders in delivering the town transformation strategy.
Finally, we seek to advance the work in the development of the wind farm, a strategic imperative that will help reduce our energy cost and contribute towards our goal of becoming carbon neutral by 2030.
OM: What do you see as the possible biggest challenge in 2024?
RB: There are a number of potential challenges for the 2024 financial year due to macro-economic factors, high inventory levels in the mid-stream and the impact of lab grown diamonds (LGDs). The latter, however, is expected to be transient as the price of LGDs is already seen to be declining.
Geopolitical tension is another key challenge impacting diamond demand and exchange rate. The war in Russia and Ukraine, for instance, has resulted in sanctions against Russian diamonds. To ensure that we get the right markets and price for our diamonds, it is important that we continue to differentiate our product and improve traceability and show the good that Namibian diamonds do.
OM: What is your final message for your stakeholders?
RB: The resilience of this business that survived against the odds and went on to thrive when everyone expected it to close, is a culmination of hard work, dedication and the trust of our shareholders and stakeholders who believed in the work that we do. As a significant contributor and role player in the Namibian economy, Namdeb would not have been able to continue without the support of the Government of Namibia to grant us a short-term royalty remission in order to ramp-up the operations.
The net result of this was that Namdeb will continue to be a major player in the economy and will continue to create value and employment for an extended period.
Our promise is to ensure that we create an efficient and effective business to deliver on our objectives and commitments to our shareholders. I am forever grateful for the support and confidence that our board of directors placed in the Namdeb Team to turn the business around and to create a better tomorrow.
As we all break for the holidays, I want to emphasize on our value of safety, by wishing all our stakeholders a safe and prosperous festive season
