WINDHOEK (Commodity Online): Namibia, a country which depends heavily on  its mineral and diamond exports, will be hit hard this year due to a fall in the country’s diamond exports.

Namdeb, the main diamond mining company, an arm of De Beers, despite mining 2.1 million carats, only managed to export 1.611 million carats last year, well below the 2.265 million the company produced in 2007.

Compared to 2006, diamond exports last year shrunk by 33 per cent, according to the mid-year economic outlook.

The analysis mirrors Namdeb’s woes as reported by the company. The diamond giant issued a statement, saying that it had to cancel its November sight – a sale to selected customers – and that its sight for December was significantly smaller than usual. The company subsequently ended the year with a large stock of unsold diamonds.

In an effort to ensure that Namdeb will regain its sparkle in a global post-recession market, the company has cut production, retained dividends of N$51 million and asked government for a temporary royalty waiver worth about half a billion dollars.

Namdeb’s slump will have far-reaching consequences for economic growth this year.

Earnings from diamond exports during the first three months of 2009 were a mere N$430 million, nearly 65 per cent less than the N$1.2 billion of the last quarter of 2008.

The year-on-year scenario looks even bleaker, with the value of exported diamonds plunging by 76 per cent from the N$1,8 billion the first quarter in 2008.

Namibia’s economic growth is largely dependent on mineral exports, particularly diamonds and uranium.

In 2006, diamonds comprised about 70 per cent of Namibia’s mineral exports in US dollar terms, followed by uranium (15 per cent), zinc (seven per cent), gold (three per cent), and copper (three per cent).

The impact of the diamond crisis was also a major consideration in the Bank of Namibia (BoN) revising its gross domestic product (GDP) growth forecast down to minus 0,6 per cent. It also played a huge role in Old Mutual Namibia Group Economist Robin Sherbourne’s recession forecast of minus 2,2 per cent.

The Central Bureau of Statistics (CBS) has been painting a particularly gloomy picture of diamond production so far this year.

Compared to the same month last year, diamond production stood at minus 39,7 per cent in April, tumbling even further to minus 54,1 per cent in May.

This scenario is a continuation of the first quarter of 2009, with production crashing to minus 100 per cent, minus 73,5 per cent and minus 58,4 per cent in January, February and March respectively, compared to the same time last year.

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