When diamonds are too good

Press, 14 March 1984, Page 16

When diamonds are too good

By

RICHARD LANDER,

in Orangemund, Namibia

of Reuter,

On a deserted beach facing the chilly waters of the Atlantic Ocean, a man digs for diamonds with a shovel and brush in the gullies of a bedrock millions of years old. The man is no romantic prospector, walking the edge of the Namibian desert as he dreams of untold fortunes when a sparkling gem catches his eye. He is perhaps the smallest link in the giant De Beers diamond chain which mines, exports, and promotes the treasures found in this remote and starkly beautiful southernmost corner of the disputed territory. C.D.M. (Consolidated Diamond Mines), wholly owned by the De Beers group of South Africa, has been digging diamonds here since 1920, when Namibia passed from German to South African control after World War One. As a large employer and vital revenue earner for the administration of Namibia, C.D.M. has been at the heart of the controversy surrounding the territory, which South Africa rules in defiance of the United Nations. Today, as Namibia moves fitfully towards independence, C.D.M. is also having to contend with the woeful state of the world diamond market. “We’re producing the wrong sort of diamonds — they’re too good,” C.D.M.’s general manager, Kobus van Jaarsveld, told reporters during a rare press trip to the mine. The “wrong sort of diamonds” are the large gems used for investment and jewellery which are out of favour at the moment. While gems normally account for 20 per cent of a mine’s output, they form practically all of the production from C.D.M. The result has been a sharp cutback in C.D.M.’s operations and profits since the diamond boom of the late 1970 s when prices soared to record levels before crashing with a force that hit many investors very hard. Mr van Jaarsveld said that a slight improvement in prices and

sales last year was limited generally to smaller stones and had little effect on C.D.M.’s fortunes. Output is likely to stay at around one million carats a year — enough to fill one-third of a standard oil drum — around half the level of six years ago. About one small dinner plate full of diamonds is extracted from 35,000 tonnes of material every day. The man with the brush and shovel is just one of 4500 workers at Oranjemund. Two-thirds are black Namibians from the north of the territory who live in hostels away from their families. The remainder, mostly white South Africans, live in the neat company town, whose lush green lawns are watered by the river that brought the diamonds to Namibia’s shores in ancient times. At the largest site, the Atlantic breakers are kept back by a wall built from the thick overburden bulldozed to expose a far thinner layer of sands containing the gems. The scene is repeated along the deserted coast for 90 kilometres amid the strictest security. Public access is totally barred to the mining area and for a further 550 kilometres further north where diamonds are known or thought to exist. Just to drive home the security message, a reward is given to those who hand in gems discovered while combing the bedrock. Individual diamonds tend to be spotted far later, however. After a complex process in the mine, they are still hidden by a rather mundane pile of pebbles until the final stage when a keen-eyed worker picks them aside with a pair of tweezers. Namibia’s progress towards statehood has focused attention on just how long the mine will continue at Orangemund. The territory’s first Black Government is likely to be formed by the South West Africa People’s Organisation (5.W.A.P.0.), which has been waging a sporadic guer-

rilla war against South African troops for almost 20 years. A large factor behind S.W.A.P.O.’s militancy has been its demand for the territory’s mineral wealth to be exploited to the best advantage of its people, an attitude which could leave C.D.M.’s future in an independent Namibia problematic. The company is confident that it can take independence in its stride, however. “We feel that our practices are such that we can live with any government,” Mr van Jaarsveld said. The general manager denied allegations that C.D.M. was “raping” the territory by taking the best diamonds ahead of independence and said that the mining programme was intended to extend C.D.M.’s life as long as possible. C.D.M.’s lifespan would depend on such factors as demand and prices for diamonds, working costs and the falling rate of diamonds

discovered in each tonne of material. “But we hope to be around in the year 2000,” he said. Industry experts noted that de Beers has had considerable experience with Black African Governments in mining and marketing their diamonds, winning their confidence in a manner of which very few South-African-based firms have been capable. In particular, its hold over the world sales of diamonds through the Central Selling Organisation (C. 5.0. which controls almost four-fifths of world output, meant that a Namibian Government would be virtually obliged to deal with the company. “They’re going to need de Beers and the C.S.O. much more than the other way round,” said one analyst who pointed to Zaire’s brief and fruitless breakaway from the C.S.O. He said that de Beers could well have closed down C.D.M. by now for economic reasons and had probably not done so to ensure

more cordial relations with a S.W.A.P.O. administration. Critics concede that wages and living conditions at C.D.M. have improved markedly over the last decade as the issue of Namibia and its future have come under close international scrutiny. Officials at the mine said that the minimum wage for a contract employee is now 280 rand (US$225) a month, with the average unskilled worker pocketing 460 rand ($370) after bonuses and receiving free food and cheap hostel accommodation. The mine says that it cannot afford to abolish the migrant labour system, an integral part of South African and Namibian mining since the start of the century and a target of Black grievances for almost as long.But it does offer permanent accommodation to a small but growing number of skilled Blacks and their families who live alongside whites in the fully integrated town.