Business Reporter
A LOW demand for pure diamonds, the rise of lab-grown diamonds, diminished costs and low manufacturing as a response to the market downturn, has resulted in a subdued monetary efficiency for Debmarine Namibia.
The firm’s income is down by 38% to N$ 8.8 billion within the 2024 monetary 12 months.
Chief Executive Officer of Debmarine Namibia Willy Mertens stated Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) diminished with 86% to slightly below a billion Namibia Dollars – in truth at N$951m.
“Let’s look at the movement in EBITDA from N$6.76bn in 2022, price or market taking out N$2.3bn in 2023 and another N$4.8bn in 2024 – that is a massive N$7.1bn over the past two years. Despite this subdued financial performance in the past two years, our balance sheet remains robust and ready for future investment when the market returns,” Mertens stated.
Mertens stated that Debmarine Namibia has been threading in tough seas and it appears to be like like a scenario that can proceed for in all probability the following two years a minimum of.
“Our industry’s challenges can roughly be summarised in three factors. The first factor is China, but let’s start with globally. Global retail demand for natural diamond jewellery was estimated to be down 3.5% in 2024. The key markets for natural diamond consumption, that is the United States of America and China, were both down; the US mildly almost flat and a sharp 21% decline for a third year in a row in China. India remains largely positive albeit from a low base,” Mertens stated.
He added that there stays a difficult outlook within the demand for pure diamonds for 2025 regardless of affordable vacation gross sales, including that the international financial development outlook is secure, however US tariffs are driving uncertainty.
Mertens added that the outlook for China stays weak for the close to and medium-term with a excessive draw back danger stemming from potential US tariffs.
“It is important to look at what happens in other diamond-producing countries, more specifically Russia and Angola, to understand its impact on the industry. You will notice almost two contrasting responses. Russia’s gradual reduction in sales with a slight change in price looks like they are reducing production to align with the lower demand. That brings me to the second factor; cheap rough supply out of Angola. Angola achieved US$1.5bn sales, 27% reduction from 2022 in 2024 and reduced prices between 30% and 55%. That was achieved by increasing volumes by almost 60%. The third and final factor is Lab-Grown Diamonds, let’s just call them LGDs. There needs to be a clear differentiation between natural diamonds and LGDs. Although the wholesale price has fallen quite dramatically with 92%, retail prices are still a bit high, meaning that LGDs compete directly with natural diamonds,” Mertens summarised.
He added that each one these elements above play again to us via the diamond costs we fetch for the tough diamonds we produce.
“We have always seen a sharp and quick bounce back in the past; the global financial crisis in 2008 and 2009, China slowdown in 2015, COVID-19 in 2020/2021, but the current downtrend has been quite deep and prolonged. We are yet to see an uptick. The big question is, will we eventually see a recovery or how long will we remain where we are and what do we need to do: as an industry and a country? Increased marketing for natural diamonds and for specific categories, natural diamond-producing countries to perhaps come together on government level and respond collectively, push for differentiation of natural diamonds, take on false claims by LGDs, educate consumers, tell the stories of the good diamonds do in producer countries. We were 35% below 2015 prices and for 2025 year to date; 50% down from 2015. Not many businesses would be able to survive such a reduction in prices in a world of ever-increasing cost. We had to respond to the low demand for natural diamonds by producing to demand. We reduced our production with 13% year-on-year from 2023 and possibly another 5% to 2025,” Mertens stated.