Namdeb, a joint venture between the Namibian government and Anglo American’s diamond unit De Beers Group, has been granted a holiday on royalty payments, the country’s mining ministry said on Friday in bid to save jobs in the shrinking sector.
Diamonds have been mined in Namibia since 1908, but land-based operations could end in 2023, as Namdeb says it no longer made economic sense under the current tax regime.
Namdeb currently pays a 10% royalty on its sales and 55% corporate tax on its profit. The firm’s chief executive said last year the royalty and tax regime for the diamond sector was too high and not conducive for an ageing, marginal asset like Namdeb.
Minister of mines and energy Tom Alwendo told the Namibian Sun newspaper that the government had “in principle” agreed with the diamond miner’s request to defer royalty payments.
“As a government, we looked at the situation, including saving jobs, and have therefore agreed to the request to put a brake on royalty payments,” Alwendo said.
More than 9,000 Namibians lost their jobs between April and October, according to the labour ministry. The southern African nation’s small economy contracted by 11.1% in the second quarter, as Covid-19 and related lockdowns took a toll.
Diamond mining is the largest source of tax revenue in Namibia, and generates 20% of the country’s export earnings.
Neither the mines minister nor officials from Namdeb would say how much the tax deferment would amount to or how long it would last.