Annual review 2007
years of diamond production Namdeb Annual Review 2007 1
years of diamond production Our vision Namdeb – the world’s leading alluvial-diamond mining company. Contents
Preferential procurement 28 Vision, mission and values 1 Our mission 100 years of history 2 Social performance 30 How diamonds benefit Namibia 4 Environmental performance 36 We produce diamonds profitably, sustainably and Organisational profile 6 Associate companies 42 responsibly to the benefit of our shareholders and Chairman’s statement 8 Corporate governance 50 Financial performance 10 Board of directors 52 stakeholders, whilst making a lasting contribution Namdeb's year in review 14 Alternate directors 53 to Namibia. Managing director’s review 16 G;ossary 54 Economic performance 22 Statutory information 55 Building a sustainable Oranjemund 26 Contact details 55
Our values
EXcellence Care Integrity TEamwork Diversity = EXCITED
This Annual Review covers the period 1 January 2007 to 31 December 2007, and includes information on Namdeb’s operations, its subsidiaries and the contributions made to production by contractors. A separate, more detailed report, to stakeholders, that will highlight our contribution to sustainable development, will be presented later in the year. For more information on this or any other documentation on the company, Integrity please visit www.namdeb.com or contact External Affairs and Corporate Communications. EXcellence Care Diversity The quality of TEamwork The quality of To do something Recognising being honest and The ability to work being very good at fairly and with the value of firm in your moral well together something great attention including all principles www.namdeb.com 2 Namdeb Annual Review 2007 Namdeb Annual Review 2007 3
years of history
The harvesting Sperrgebiet shipwreck is the find of the of diamonds in century for Namibia Namibia takes While the Namibian nation was marking the centenary since the discovery of diamonds, another fascinating discovery unfolded in April in the form of the oldest shape sub-saharan shipwreck yet in Namdeb’s mining area. The find yielded a wealth of objects including six bronze canons, several tons of copper, over 500 elephant tusks, In 1920, Sir Ernest Oppenheimer navigational instruments, weapons and thousands of Spanish and Portuguese gold formed Consolidated Diamond coins, minted in the late 1400s and early 1500s. For Namibia, it is the archaeological Mines of South West Africa (CDM); find of the century and a fitting way to celebrate the 100th year of diamond mining in in 1923, CDM concluded the the Sperrgebiet, where the shipwreck was found. Halbscheid Agreement with the South West African Administration, which granted CDM the mining rights for the Sperrgebiet. Oranjemund, a unique town that owes its existence A shiny treasure starts a diamond rush to diamond mining, was established Diamonds originated deep in the interior of southern Africa. Over millennia, the Orange River carried in 1936. It adopted its name from them to the Atlantic Ocean where they were deposited on ancient beaches, which in time became part its geographical position at the of the mainland. mouth of the Orange River, the national boundary between the Prior to the discovery of diamonds in the Republics of Namibia and South Namibian desert, some prospecting had Africa, and services the Mining taken place along the coast as early as Area 1 and Orange River mines. 1863. David Christiaan, a Hottentot Chief, gave a Cape Town firm (De Pass, Spence and Company) a concession extending from The birth of Angra Paquena (Lüderitz) to the Orange River and 32 kilometres inland from the coast. Namdeb
In 1994, an agreement between De Beers and the Government of the Republic of Namibia resulted in the In 1908, railway worker Zacharia Lewala formation of Namdeb Diamond Corporation (Pty) Limited. All of the De Beers group’s existing Namibian stumbled on a shiny treasure that started a major mining licences and related rights were replaced by a consolidated and rationalised mineral agreement, diamond rush. As a result, diamond mining drawn up under Namibia’s post-independence mineral legislation. The formal signing ceremony, attended regulations were introduced in 1911 and the by Namibia’s Founding President Sam Nujoma and the then chairman of De Beers Centenary Julian Sperrgebiet or “forbidden territory” was declared. Ogilvie-Thompson, took place at State House in Windhoek. The key wishes expressed on that historic day were that Namdeb:
• would grow to become an important global player in the diamond industry; and In this photograph from the early 1950s,workers remove diamond-bearing gravel from the bedrock at • would continue to be the leading national provider of government revenue, foreign exchange earner and Consolidated Diamond Mines of South West Africa. employer, while setting benchmarks in respect of excellence in people. 4 Namdeb Annual Review 2007 Namdeb Annual Review 2007 5
They create prosperity How diamonds Intellectual capital As the world’s leading alluvial-diamond mining company, Namdeb has a wealth of expertise acquired over many years of diamond mining and aims to create successful and sustainable mining benefit Namibia activity wherever it operates.
The life of Namibia’s onshore operations has been extended through significant technological and human investment. Namdeb continues to strive to extend the life of all its mining operations in Namibia – whether through exploring for new deposits or investing in people and technology to optimise existing resources.
De Beers’ partnership with the Namibian Government has ensured that Namdeb has access to knowledge and expertise in all aspects of diamond mining through They build the economy the diamond pipeline. The NDTC helps to ensure continued demand for Namibia’s most valuable resource.
Integrity Economic muscle As a key participant in the Kimberley Process, Namibia sets benchmarks in the legislative and regulatory processes and Namdeb’s contribution to the economy through revenues generated and partnerships forged has management of diamond resources. Combined with good government practice, this ensures that revenue from Namibia’s meant that we are the country’s largest financial contributor. Diamonds are an important generator of diamonds is ploughed back into the economy for the benefit of all its people. export earnings, accounting for more than 40% of export revenue, 7% of government revenue and more than 10% of gross domestic product (GDP). Infrastructure Diamonds are Namibia’s single biggest export product and the backbone of the economy, acting as a catalyst for the provision Namdeb, De Beers Marine Namibia, NamGem and the Namibia Diamond Trading Company (NDTC) and extension of infrastructure such as roads, hospitals, houses and schools. Indeed, Namibia spends almost half of its revenue employ over 3 000 people, most of whom are Namibian citizens. This makes the Namibian De Beers on public services, working actively to alleviate poverty, fight disease and advance development. family of companies one of the country’s largest employers, and creates multiple opportunities for partners – not only in mining, but also in technology, enterprise development and academic research. Furthermore, for every 10 people employed at Namdeb, an additional five people are employed throughout the economy. They make a difference in people’s lives Through successful partnerships, and a deep commitment to the Namibian people, Namdeb believes its sustainable diamond mining enterprise has made tangible differences to the Namibian nation. Through its commitment to working together with both government and the people of Namibia, Namdeb has successfully ensured that the country’s most inaccessible diamond resources are turned into wealth that touches the lives of Personal strength all Namibians. As one of the country’s largest employers, Namdeb provides Supporting people exciting learning opportunities for Namdeb has successfully helped to develop Namibian society through its bursary students and employees, substantial investment in social, educational and environmental projects. both within and outside Namibia’s Millions of Namibian dollars have already been spent on projects of all sizes borders. Namdeb views education – from large-scale initiatives to small-business ideas. Namdeb remains the as critical to the growth of a thriving largest corporate responsibility contributor to the socio-economic development of the country. economy and has made significant investments in all levels of education Protecting people and training to help ensure a brighter Namdeb was the first company in Namibia to provide anti-retroviral treatment (ART) for permanent future for the country and its people. employees and their spouses/life partners, and is globally recognised as a leader in combating HIV/Aids in the workplace.
Protecting lives People working at Namdeb operations enjoy among the highest levels of safety and environmental standards in the world. Almost all of Namdeb’s operations have achieved the highest Nosa ratings as well as ISO 14001 certification.
Conserving the environment Namdeb continues to be involved in numerous conservation, monitoring and ecological history programmes which aim to minimise the potential impact of its operations on the environment. 6 Namdeb Annual Review 2007
Organisational profile
Republic of Namdeb Diamond Corporation (Pty) Limited Namibia
Founded 1994 Owned Equally by the Namibian Government and De Beers Société Anonyme Employees More than 3 000 Head office Windhoek Core business Diamond mining in Namibia and related activities such as sorting, cutting and polishing. All the diamonds mined at Namdeb’s operations are sold to the NDTC for resale on the international diamond market.
The town of Oranjemund serves the Mining Area 1 and Orange River Mines operations. It is also the logistics base Republic of for the De Beers Marine Namibia crew-change operation and home to most Namdeb employees. The Namdeb South Africa office in the town of Lüderitz provides services to Elizabeth Bay (E/Bay) Mine, the main operation of Northern Areas mines.
The company holds six mining licences in the following areas:
• Mining Area 1, Bogenfels and • The Orange River Mining Licence Elizabeth Bay licences Extends along the Orange River for about 50 Extends from the Orange River in the south to kilometres inland from the Mining Area 1 boundary. Orange River Mining Licence Lüderitz in the north, and from a few kilometres offshore in the Atlantic Ocean to around 20 to 35 • Atlantic 1 Mining Licence Mining Area 1 Mining Licence kilometres inland. Encompasses a portion of the middle shelf of the Atlantic Ocean, from the boundary of Mining Area 1 Atlantic 1 Mining Licence • Douglas Bay Mining Licence to about 65 kilometres from the shore. Extends north of Lüderitz for some 60 kilometres Bogenfels Mining Licence and approximately 15 kilometres inland of the Atlantic high-water mark. Elizabeth Bay Mining Licence
Other services Douglas Bay Mining Licence A fully functional hospital and primary school are maintained by the company. The town of Oranjemund is maintained and prepared for the future positive legacy by the Oranjemund Town Management Company, a wholly owned Mining Licence 128A, 128B, 128C subsidiary of Namdeb, while diamond cutting and polishing is done by NamGem, another wholly owned subsidiary based in Okahandja. The company’s social responsibility programme is managed by the Namdeb Social Fund (NSF) Exclusive Prospecting Licences (EPL) while Oshipe Development Fund, a wholly owned subsidiary of Namdeb, aims to promote entrepreneurship and (3605, 3606, 3607, 3608, 3609, 36010 small business development through investment in commercially viable business in the country. and 36011) Caprivi Region 8 Namdeb Annual Review 2007 Namdeb Annual Review 2007 9
Chairman’s Building for the future – statement by learning from experience
Queen Elizabeth II, at one of her recent birthday This is indeed an impressive achievement and clear Throughout the journey of mining for a century we celebrations, commented that “everyone can get old testimony that De Beers Marine Namibia has grown in have had to adopt and employ new methods to mine – you just have to live long enough.” This comment leaps and bounds to take over the leadership mantle successfully and sustainably. At this point in the history holds so much truth in every aspect of life, including from Namdeb land – a role it will increasingly play in of Namdeb, greater impetus is required to accelerate diamond mining. Of course, it’s not the years alone future. fit for purpose, flexible and non-traditional working which matters, but what one has achieved with them. and employment practices to ensure that Namdeb Our safety performance for 2007 was much improved continues to be the world's leading alluvial diamond As diamond mining in Namibia enters its 100th compared to 2006. We closed the year with a LTIFR mining company. year, we look back with immense pride at a long of 0,17 and reduced injuries and vehicle accidents by and colourful diamond mining journey of success, more than 40% in comparison to the previous year. The electricity challenge currently being experienced achievement, partnership – and living long enough to We reached the 6 Million Fatality-Free Shift mark in across southern Africa and the ever-increasing fuel be successfully a century old. November, retained NOSCAR status, retained our ISO price will certainly have an adverse effect on our 14001 certification and also obtained OHSAS 18001 operations as we move to close Chapter II (delivering In what is perhaps a timeous reminder of the certification. cumulatively 10 million carats by 2010). impressive age we have attained, 2007 has proven to be one of the more difficult years in the recent history Another important milestone was attaining first and While we did not achieve all our production and of land mining. The land operations recovered 60 000 second position in the prestigious NOSA International financial targets over the last year, we are fortunate carats less than its budget of 1,1 million carats and Top 100 Mines Competition. to have two strong shareholders in De Beers and exceeded its cost budget. Some of the reasons for the the Government of the Republic of Namibia. The under-performance of our Namdeb land operations Being uncompromising on safety in the workplace strength of this partnership is the reason why we can were: must become a standard of perfection that we all look back to 2007 and see it as a year of learning strive for. Any incident or injury on duty is simply one and experiences that can only make us better and • A fire at the No. 3 Plant Main Control Centre; too many. stronger. • Lower than expected productivity, especially in the mining production areas; In terms of the environment, we continued to make We will take the lessons of 2007 as an inspiration • Increase in costs, especially fuel; great progress on our rehabilitation plan and enjoying to deliver bigger and better results for all our • Adverse weather conditions, thereby increasing tremendous support from our stakeholders. stakeholders and shareholders in 2008 and beyond. the cost of maintaining the sea wall; and • Incidents of flooding of the mini-mine. As we set forth into 2008 we must remind ourselves of our motto: ‘On diamonds we build’. Our motto While these reasons provide a sound technical provides us with the very important reminder that explanation for our under-performance, the more beyond our commercial objectives, Namdeb carries salient explanation lies in the reality that land-based a national duty. This duty is best encapsulated by mining is now in its 100th year – and has reached Namibia’s Vision 2030 – which sets very bold targets a point which will require extra-ordinary techniques for Namibians to enjoy standards of living equal to and skills to continue to make it a success. More their counterparts in Europe by 2030. As one of Nicky Oppenheimer importantly, land-based mining will require realistic the country’s biggest contributors to the Namibian and sustainable targets for us to continue to enjoy the treasury, Namibians look to Namdeb to play a leading Chairman fruits of diamond mining. role in the national development of the country.
However, management has prepared well for these In spite of our challenges with land mining, Namdeb challenges, and has had the vision to invest for the has no intention of relinquishing its prominent position future. As a result, in spite of the set-backs on the in Namibia – that of being one of the most important land operations, Namdeb’s total diamond production players in the economy. To do so, we must reassess continued to exceed 2 million carats – with land our operations and take courageous decisions to accounting for 1,04 million carats and marine for ensure that Namdeb is correctly resourced to address 1,x 14 million carats. the challenges of mining profitably and sustainably. 10 Namdeb Annual Review 2007 Namdeb Annual Review 2007 11
Financial performance
Highlights Production statistics 2007 2006 Production exceeded two million carats for the second year in a row – a 4% 000s 000s Carats produced 2 176 2 085 improvement on 2006. However, as a result of production schedules, carat Carats sold 2 060 2 174 sales were 5% below those of 2006. – land 1 030 1 120 – marine 1 030 1 054 Diamond sales revenue at N$4,56 billion is 15% lower than in 2006 as a result Tons stripped/treated – land 56 165 58 532 of the reduction in carats sold and a change in mix, combined with the effect Square metres mined – marine 5 312 5 327 of the price correction in the rough diamond market in the second half of 2006. Rough diamond prices have been strengthening during 2007.
Profit before tax decreased to N$776 million (2006: N$1,294 million), mainly due to the reduction in revenue combined with increased production costs, Value-added distribution partially offset by a decrease in other operating expenses.
Taxes amounted to N$633 million (2006: N$989 million), representing 82% of 2007 2006 pre-tax profits (2006: 76%).
10% Production costs came under pressure during 2007 due to higher than 18%
anticipated fuel prices and salary increases granted, as well as additional 39% 29% maintenance work required on the sea wall due to adverse weather conditions.
Other operating expenses decreased due to the arrangements of the new sales 48% 13% agreement coming in to effect in 2007 which led to the establishment of NDTC – 38% 5% a 50:50 joint venture marketing company responsible for valuing, sorting, selling and marketing of Namdeb’s production.
Employee compensation
Dividends paid to shareholders
Direct and indirect taxes
Retention to support future business growth 12 Namdeb Annual Review 2007 Namdeb Annual Review 2007 13
Financial performance
Balance sheet Income statement As at 31 December 2007 2007 2006 For the year ended 31 December 2007 2007 2006 N$ millions N$ millions N$ millions N$ millions ASSETS Diamond sales 4 562 5 366 Non-current assets Property, plant and equipment, Cost of sales 3 503 3 590 mining rights and investments 1 206 1 169 Other operating expenses 283 482 Profit before tax 776 1 294 1 206 1 169 Taxation 633 989 Current assets Net profit for the year 143 305 Diamond and stores inventories 419 214 Trade and other receivables 355 322 Cash and cash equivalents - 336 774 872
Total assets 1 980 2 041
EQUITY AND LIABILITIES Capital and reserves Cash flow summary Share capital and non-distributable reserves 125 112 Distributable reserves 260 202 For the year ended 31 December 2007 2007 2006 385 314 N$ millions N$ millions Cash generated from operations 829 1 805 Non-current liabilities Deferred taxation 226 179 Taxation paid (1 049) (615) Provisions for liabilities and charges 470 428 696 607 Net cash from operating activities (220) 1 190 Current liabilities Net cash used in investing activities (204) (439) Trade and other payables 547 532 Shareholders for dividends 12 165 Net cash used in financing activities (252) (148) Net bank overdraft 340 - Taxation liability - 423 899 1 120 Net (decrease) / increase in cash and cash equivalents (676) 603 Cash and cash equivalents at beginning of the year 336 (267)
Total equity and liabilities 1 980 2 041 Cash and cash equivalents at end of the year (340) 336 14 Namdeb Annual Review 2007 Namdeb Annual Review 2007 15
September 2007 Namdeb operations hosted former President Sam Nujoma. The visit to the Sperrgebiet and Atlantic 1 was hosted by the Geological Department in Namdeb’s year conjunction with De Beers Marine Namibia. in review
June 2007 As part of a benchmarking exercise, January 2007 Zimbabwean Minister of Mines and The Government of the Republic of Namibia and Mining Development Charles Tahwa, De Beers reached an agreement that will secure accompanied by his Namibian counterpart the sales of Nambia’s diamonds through the Erkki Nghimtina and other high ranking Namibia Diamond Trading Company until 2013. May 2007 officials, visited Namdeb operations. November 2007 One of Africa’s greatest present Namdeb achieves six million fatality- For the first time, this unique agreement will extend day explorers, Kingsley Holgate free shifts – a record to be proud of and from diamond mining into diamond marketing through and his expedition team visited celebrate while realizing that it is vital that the establishment of a 50:50 partnership in a new Oranjemund on their Cape to Cape the company remains a leader in safety. company – Namibia Diamond Trading Company – expedition – The Outside Edge – a charged with the responsibility of valuing, sorting, selling circumnavigation of Africa by land Namdeb hosts the annual West Coast and marketing of Namdeb’s diamond production. through 33 countries. Metallurgical conference, with the focus on metallurgical processes across the principal areas of ore preparation, or concentration, recovery processes, design, commissioning, technology and March 2007 project overviews from business units. As part of Namdeb and its group of companies' social responsibility programme, NamGem Diamond Manufacturing Company handed over a newly renovated farmhouse (at a cost of N$350 000) to the Ileni Twikwafeni Project, a community initiative of the Five Rand Camp on the July 2007 October 2007 outskirts of Okahandja. The facility hosts, among Oranjemund Town Management Company, National Diamond Trading Company and others, community based activities, HIV/Aids a wholly-owned Namdeb subsidiary tasked De Beers Group announce the counselling and home-based care activities, as with preparing the town of Oranjemund for outcome of the first application process well as a number of income generating projects. proclamation and a prosperous future beyond for the supply of rough diamonds the mining era, is officially launched. to 11 sightholders in Namibia.
April 2007
Namdeb Financial Performance for the year ended 31 December 2007 On the occasion of its full results for the period
Highlights
0RODUCTION EXCEEDED MILLION CARATS FOR THE SECOND YEAR IN A ROW A IMPROVEMENT ON BUT AS A RESULT OF PRODUCTION SCHEDULES CARAT SALES WERE BELOW THOSE OF ending December 2006, Namdeb announces a $IAMOND SALES REVENUE AT . BILLION IS LOWER THAN IN AS A RESULT OF THE REDUCTION IN CARATS SOLD A CHANGE IN MIX COMBINED WITH THE EFFECT OF THE PRICE CORRECTION IN THE ROUGH DIAMOND MARKET IN THE SECOND HALF OF 2OUGH DIAMOND PRICES HAVE BEEN STRENGTHENING DURING 0ROl T BEFORE TAX DECREASED TO . MILLION . MILLION MAINLY DUE TO THE REDUCTION IN REVENUE INCREASED PRODUCTION COSTS PARTIALLY OFFSET BY DECREASES IN PROSPECTING CHARGES AND OTHER OPERATING EXPENSES 27% increase in its carat production, attributed 4AXES AMOUNTED TO . MILLION . MILLION REPRESENTING OF PRE TAX PROl TS 0RODUCTION COSTS CAME UNDER PRESSURE DURING DUE TO HIGHER THAN ANTICIPATED FUEL PRICES AND SALARY INCREASES GRANTED AS WELL AS ADDITIONAL MAINTENANCE WORK REQUIRED ON THE SEA WALL DUE TO ADVERSE WEATHER CONDITIONS %XPENDITURE ON PROSPECTING AND 2$ ARE LOWER THAN IN AS THE -ARINE $REDGING PROJECT EXPENSES to an increase in land-based production at the INCURRED IN WERE NOT REPEATED IN /THER OPERATING EXPENSES WERE FAVOURABLY IMPACTED BY THE ARRANGEMENTS OF THE NEW SALES AGREEMENT COMING INTO EFFECT IN WHICH LED TO THE ESTABLISHMENT OF .$4# n A JOINT VENTURE MARKETING COMPANY RESPONSIBLE FOR VALUING SORTING SELLING AND MARKETING OF .AMDEBS PRODUCTION mine’s No 3 Plant, Pocket Beaches as well as
Production statistics Balance sheet Income statement 2007 2006 2007 2006 000s 000s !S AT $ECEMBER 2007 2006
ASSETS $IAMOND SALES increased marine production. Carats produced 2,176 2,085 #OST OF SALES Non-current assets 'ROSS PROl T s 0ROPERTY PLANT AND EQUIPMENT Carats sold 2,060 2,174 MINING RIGHTS AND INVESTMENTS 0ROSPECTING AND 2$ s LAND /THER OPERATING EXPENSES 1,206 1,169 s MARINE Profi t before tax 776 1,294 Current assets 4AXATION 4ONS STRIPPEDTREATED n LAND s $IAMOND AND 3QUARE METRES MINED n MARINE STORES INVENTORIES Net profi t for the year 143 305 s 4RADE AND OTHER RECEIVABLES s #ASH AND CASH EQUIVALENTS Namdeb operations, through the Sida Ei !gûs Value added distribution 2007 774 872 Cash fl ow summary 2007 2006 Total assets 1,980 2,041
EQUITY AND LIABILITIES #ASH GENERATED FROM OPERATIONS 4AXATION PAID Task Group, hosts an inter-ministerial delegation Capital and reserves s 3HARE CAPITAL AND NON DISTRIBUTABLE RESERVES .ET CASH FROM OPERATING ACTIVITIES s $ISTRIBUTABLE RESERVES .ET CASH USED IN INVESTING ACTIVITIES .ET CASH USED IN l NANCING ACTIVITIES .ET DECREASE INCREASE IN to brief them on the future of land-based Non-current liabilities CASH AND CASH EQUIVALENTS s $EFERRED TAXATION s 0ROVISIONS FOR LIABILITIES #ASH AND CASH EQUIVALENTS AND CHARGES AT BEGINNING OF THE YEAR Value added distribution 2006 696 607 operations and developments. Cash and cash equivalents Current liabilities at end of the year (340) 336 s 4RADE AND OTHER PAYABLES s 3HAREHOLDERS FOR DIVIDENDS s .ET BANK OVERDRAFT For more information, contact: s 4AXATION LIABILITY (ILIFA -BAKO 'ROUP -ANAGER %XTERNAL !FFAIRS AND
#ORPORATE #OMMUNICATIONS .AMDEB #ENTRE 899 1,120 TH &LOOR $R &RANS )NDONGO 3TREET 7INDHOEK 4ELEPHONE Total equity and liabilities 1,980 2,041 &ACSIMILE E MAIL HILIFAMBAKO NAMDEBCOM 7EBSITE WWWNAMDEBCOM Our Values We are August 2007 EXcellence Ca re Integrity TEamwork Diversity ‘EXCITED’ Namdeb breaks a record at the NOSA Top 100 international mining companies awards ceremony by receiving three top safety awards – the first time ever in the history of NOSA that a mining company has won more than one of the top three awards. December 2007 Namdeb and the Mineworkers Union of Namibia Chairman of De Beers, Nicky Oppenheimer, February 2007 (MUN) successfully concluded wage negotiations on officially launched the De Beers Namibia Fund. Namdeb Social Fund donates over N$3 million a 10% increase across the board for the company’s The fund is the official vehicle through which to 42 projects and organizations countrywide union members (who make up 70% of staff). ranging from education, health and welfare, De Beers will support corporate social community development and SME projects. investment initiatives in Namibia. 16 Namdeb Annual Review 2007 Namdeb Annual Review 2007 17
Managing Strong production levels and bold new initiatives mark Namdeb’s contribution director’s review to national development
The year 2007 was exciting for Namdeb, with the Strategic review company recovering over two million carats for the In our previous year’s report (2006), we outlined second year in succession. Production from marine the objectives for a comprehensive strategic mining yielded 1,18 million carats (up from 1,05 review for Namdeb land operations, which we million carats in 2006) and land operations produced believe will deliver a turn-around strategy through 999 000 carats (compared to 1,035 million carats project Sida Ei !gûs. Indeed, as reported then, in 2006). 2007 was a year of designing and developing this change management strategy. We are happy This achievement is particularly pleasing as, only to report some positive achievements. The Sida a few years ago, it was considered impossible for Ei !gûs strategy is premised on three pillars: output to exceed the regular production levels of 1,3 million carats per annum. However, with the 1. A business model to guide future decisions application of innovative beach accretion strategies, about the full diamond pipeline from Namdeb has been able to extend its land operations exploration through to closure of operations. in Mining Area 1 and boost production substantially. 2. Achieving the full potential of Namdeb's mineral Record production despite challenges resources. This will be done by improving current The record figures of 2007 were achieved in spite operations through asset sweat opportunities of production disruptions and adverse weather. and cost optimisation, as well as the delivery Damage from fire at Number 3 Treatment Plant of new projects; these projects will generate rendered it inactive for five months. There were new carat opportunities to replace depleting also added costs to transport ore to alternative resources, while exceeding Chapter 2 Big treatment facilities. Poor weather during the Hairy Audacious Goal (BHAG) and increasing winter months created harsh sea conditions, our life of mine and production projections. leading to additional maintenance costs for the sea-walls that protect the low-lying mini-mines. 3. Creating a positive legacy through the implementation of an integrated closure plan. Production from the Elizabeth Bay Mine exceeded budget for the first time since the commissioning The strategy will be achieved through seven work of the new treatment plant in 2004. Similarly, the streams or strategic initiatives: Carats Today, combined contractor operations had a good fourth Carats Tomorrow, Business Investment Model, quarter, making up for the production shortfalls Overheads and Costs Optimisation, Positive Legacy, incurred during the third quarter. A total of 30 000 Organisational Effectiveness, Communication carats was recovered from the combined surf and Change Management. Instead of rolling zone, shallow marine and mid-water operations. out these initiatives exclusively as a separate The larger-than-expected average stone size Sida Ei !gûs project, the workstreams will be from this area contributed to a very good financial implemented as part of the ongoing operations. performance. During the course of 2008, it is anticipated that the shallow marine sector will With this re-organisation, the new Corporate expand, with the addition of three vessels. Strategic Plan is now in an improved position to guide management efforts to restructure the Financial overview Namdeb land operations into a more fit-for- Notwithstanding a good production, Namdeb did purpose business uwnit that will deliver results not achieve budget, mainly as a result of a shortfall while downscaling the operations. We have in carats sold and an increase in unbudgeted commenced the implementation of this strategy and expenditure – as discussed above and in other believe that Sida Ei !gûs provides the appropriate relevant sections of this report. The company’s change framework for Namdeb land operations. turnover was N$4,6 billion (15% lower than 2006) and the distributable amount was N$671 million. 18 Namdeb Annual Review 2007 Namdeb Annual Review 2007 19
Managing director’s review continued
Organisational effectiveness (compared to 0,35 in 2006). Although we have Managing the mining footprint To enhance efficiency and to eliminate unnecessary zero tolerance towards injuries and accidents, Namdeb’s rehabilitation plan was finalised duplication and bureaucracy, we continued to the 2007 LTIFR is a commendable improvement at the end of October 2007. Seven pilot embed the principles of workplace accountability on the previous year. Namdeb also recorded six projects were devised to provide a more throughout the organization. Accordingly, we million fatality-free shifts, which is a remarkable accurate costing of the tasks of rehabilitation, have embarked upon a comprehensive review of achievement for an operation of its size and age. so that these could be fed into the detailed systems, policies and processes to make them cost estimate for the March 2008 board simpler, faster and more effective to ensure fast and Our business philosophy and principles require all meeting. The first of these pilot projects effective service delivery across the organization. Namdeb operations to adhere to the national safety has been completed and signed off; the legislation and work towards best practice safety project was the rehabilitation of overburden We have set ourselves an ambitious goal of standards such as OHSAS 18001 and the NOSA dumps and mined areas at Aches and other pushing the organization’s maturity level from Integrated Safety, Health and Environmental System. disturbed areas along the Sendelingsdrif to Level II to Level III, where systems, policies and We continued liaising with regulatory agencies, Oranjemund road. The other pilot projects procedures are standardized and benchmarked employee representatives and local communities to – in Mining Area 1 and along the road from against best practices. We have adopted a new promote partnership on safety issues and enable Oranjemund to Lüderitz – are ongoing. remuneration policy and retention strategy, as a supportive and accident-free safety culture. All well as a review of the current employee value employees and contractors follow health and safety Partnering with government and private proposition to meet the ever changing needs practices consistent with our health and safety policy. institutions has enabled Namdeb to go of a diverse and knowledgeable workforce. far beyond complying with minimum legal All Namdeb operations hold the five-star platinum requirements. Namdeb participates in the Safer operations NOSCAR status, graded on the NOSA Integrated Millennium Seed Bank Project, together with The combined lost time injury frequency rate (LTIFR) Safety, Health and Environmental system. Since Namibia’s Ministry of Agriculture, Water and for all of Namdeb’s operations was 0,17 in 2007 2005, all our active operations have been included Forestry and the Royal Botanic Gardens in the list of NOSA Top 100 International Mining at Kew in London. This project researches Companies. We are particularly pleased that in 2007, the development of restoration techniques. Elizabeth Bay Mine was awarded first position in this Rehabilitation planning is co-ordinated with league, with Orange River Mine named as runner-up. the Ministry of Environment and Tourism’s planning for the future Sperrgebiet National Similarly, during November 2007, Namdeb Park, and ministry staff is directly involved achieved a new milestone by obtaining in Namdeb’s rehabilitation projects. actions had been taken, and personnel were keenly OHSAS 18001 certification. committed to maintaining and improving the system. An inter-ministerial committee has been Environmental management mandated by the Namibian Government to The complement of environmental personnel at the Effective management of the impact of mining and provide input to Namdeb’s Strategic Business operations was increased to ensure the maintenance rehabilitation is part of any good mining process and and Closure Plan. A familiarisation visit took of the Environmental Management System to mines are accountable for ensuring that the impacted place in 2007. A rehabilitation programme is ISO 14001 requirements. A detailed, fast-track areas are rehabilitated. In line with the Minerals presently being developed which will schedule orientation and development plan was developed (Prospecting and Mining) Act of 1992, Namdeb’s rehabilitation activities over the coming years. to assist with the training of the new recruits. environmental and rehabilitation policies prescribe the rehabilitation requirements in its license areas. Environmental certification requirements Health focus continues The South African Bureau of Standards (SABS) Namdeb has a holistic wellness programme that To ensure that Namdeb fully complies with national conducted an ISO 14001 surveillance audit during focuses on the prevention and care of diseases, rehabilitation standards (or, in the absence of national November 2007, and confirmed our continued providing a variety of services and a specific focus standards, global best practice), the company compliance to the ISO 14001:2004 Environmental on HIV and Aids. The HIV and Aids management has contracted a specialist desert ecologist to Management System. Non-conformities were strategy covers a range of key areas, including develop its comprehensive rehabilitation plan. This classified as minor, and related to minor legal care and support to employees, life partners approach has provided a strong scientific basis for issues, operational practice and progress with and community members, as well as awareness the rehabilitation plan, allowing the formulation of environmental management plans. Conclusions were and education programmes to support the practical solutions with a clear business case. that the system had been improved, management efforts of government and other stakeholders. 20 Namdeb Annual Review 2007 Namdeb Annual Review 2007 21
Managing director’s review continued
About 90% of the employees are well informed and viable and sustainable businesses, and facilitate business development (11%). More details of the stakeholders the challenges posed by the declining find the wellness programme useful and interesting, the transfer of capacity to Namibian suppliers. fund’s donations can be found on pages 34 and 35. carats profile and the need to prepare for the lower according to the latest Key Area Performance (KAP) production outputs we are witnessing today. survey. During 2007, more than 80% of employees In 2007, Namdeb had N$1,48 billion in controllable Building our skills base undertook voluntary counselling and testing. procurement spend, of which N$633 million Namdeb is committed to the development and There remains potential if the Carats Tomorrow (42%) was with accredited Namibian companies enhancement of critical mining skills. In the year projects are able to add new reserves that can Anti-retroviral therapy is provided at no charge with various levels of transformation status. under review, 27 young Namibians were sponsored extend the life of mine and save some jobs. We are to employees and life-partners. The majority of The company concentrates its procurement by Namdeb at tertiary academic institutions in therefore committed to pursuing these opportunities Namdeb HIV-positive employees are registered for empowerment efforts on businesses which have southern Africa, to pursue studies in various in line with our chapter 2 BHAG strategy, to ensure treatment, with 80% compliance. There has been an a broad-based empowerment status, are based technical disciplines core to Namdeb’s operations; that the company delivers 10 million profitable overall decrease in HIV prevalence due to employee in the regions of Namdeb operations, and provide 25 of these students were from historically carats and a distributable amount of N$1,1 billion movements (reducing from 11,4% in 2003 to 8,7% those products and services that are required disadvantaged groups and nine were female. to our shareholders by 2010. This can only be in 2007) and in most age groups and job bands. by Namdeb’s range of business activities. achieved by ensuring that the organisation is quick Ten bursary holders completed their studies and and effective in its response to challenges at both Preferential procurement and entrepreneurship Oshipe Development Fund, a wholly-owned took up employment with Namdeb as graduate an operational level and in the global market. The Namdeb black economic empowerment (BEE) subsidiary of Namdeb, contributes to small trainees in 2007, and another five were in their final policy provides guidance on how the company enterprise development through financial year of studies. Twelve bursaries were awarded for The next two years will therefore see significant can contribute to the Namibian transformation assistance, ongoing monitoring and business the year 2008 in the fields of engineering, control and changes as we strive to position Namdeb for future requirements and the national ‘Vision 2030’ advice. To date, Oshipe has invested N$8,9 instrumentation, metallurgy, mining, administration growth with a structure and culture that is ‘fit for development strategy. It aims to foster a culture of million in seven businesses, of which N$3,6 million and geology. This takes the total value of Namdeb purpose’. The fact that we are witnessing many entrepreneurship among historically disadvantaged (73%) were in five projects by the end of 2007. bursaries in the year ahead to N$2 million. fundamental changes within our company is a Namibians, promote the development of commercially sign of strength and that we are indeed a learning In April 2007, the Office of the Prime Minister Namdeb also operates a grant scheme which and proactive organisation. It is a testimony to appointed consultants to design a transformation provides financial assistance with no payback our tenacity and flexibility that we continue to strategy for Namibia. This process of Transformational obligations to deserving Namibians who wish thrive in rough times, as we have done through Economic Social Empowerment Framework to further their studies. During 2007, 187 people the 72 years of diamond mining in this country. (TESEF) incorporates a number of the key principles benefited from the scheme, including 63 dependants that Namdeb has incorporated in its preferential of Namdeb employees. Both the bursary and grant procurement activities, and the company contributes schemes supplement talent management and to TESEF at its own operations, within the Namibian are aligned to the human resources development Chamber of Mines, and at strategic and national level. plan as outlined in the national ‘Vision 2030’.
Corporate social investment Details of these and other skills development In pursuit of its business goals, Namdeb is initiatives can be found on pages 30-32. committed to sustainable development, especially in the local communities where it operates. Outlook for 2008 Inge Zaamwani-Kamwi The Sida Ei !gûs project, which commenced full The Namdeb Social Fund is the country’s implementation in the fourth quarter of 2007, set the Managing Director leading corporate social responsibility fund, conceptual framework for the future of Namdeb land and has donated over N$20 million to various operations. If fully implemented, the strategy holds beneficiaries since its inception in 1994. immense potential to reposition the land operations as a much smaller and decentralized business In 2007, the fund contributed N$3,3 million to some unit, while still making a significant contribution 40 projects in areas including education, health to production and revenue for its shareholders. and welfare, community development and sport However, it must be accepted that it will not be development. Education was the biggest beneficiary, able to sustain the current levels of employment receiving 36% of the fund’s donations; this was and the overheads associated with maintaining followed by health and welfare (16%), community the town of Oranjemund. We have – over the last development (12%), public affairs (12%) and small five years or more – been communicating to all 22 Namdeb Annual Review 2007 Namdeb Annual Review 2007 23
Economic Innovative technology performance pays dividends
Diamond Area No 1: Over one million carats The project has developed to the stage where a test produced on land production unit is required to verify certain critical assumptions Diamond Area No 1, situated on the south-western in order to substantiate the business case, and the necessary coast of Namibia, is an important contributor to preparations to start construction of this unit by the end of Namdeb’s production. The carat production fell short 2008 are on track. of the budgeted target by 7% and the tons treated by 5%. The main factor in the negative variance in The Jet Rig inter-tidal corridor sampling machine is in the Diamond Area 1 was that 3 Plant was not in operation process of gathering bulk samples, while the Seawalker for approximately five months due a fire incident that platform is being converted for sampling in the ultra shallow damaged its motor control centre. The impact was water during 2008. mitigated by treating the diamondiferous material at 4 Plant on a continuous operation bases. Production ramp-up from this potentially high prospective block is scheduled to commence in 2009. Conventional mining operations at 3 Plant, 4 Plant, Recovery Tailings Retreatment (RTR) plant, Pre-treatment Facility (PTF), Pocket Beaches, Elizabeth Bay and Orange River Mines continued.
Technical challenges were experienced at the RTR plant during the first quarter of 2007. These were resolved during the year. The planned tailings dump retreatment operations at 3 Plant were postponed as additional ore of economical grade became available.
Mining at Pocket Beaches Site 2 was completed with the depletion of the ore body. The plant and workforce were successfully deployed to Sites 11 and 12. Commissioning of the plant started during the last quarter of 2007 and full production is expected during 2008. The final recovery facility was relocated to the Orange River Mines to recover diamonds from stored X-ray tailings. At Elizabeth Bay, the upgraded front end was successfully commissioned.
Inshore Project at advanced stage Project work to prove the technical and economic viability of exploiting the Inshore mining area is at an advanced stage.
This area comprises the Inter Tidal Corridor and Ultra Shallow Water portions of the land-based mining licence, and is typified by shallow water and high Mining Area 1 energy surf which is inaccessible to sea-going vessels. The mini-mine concept has been proven successful over the past two years as an effective way of mining accreted Jet rig sampling platform in operation areas and spreading risk in the north of Mining Area 1 (MA1). 24 Namdeb Annual Review 2007 Namdeb Annual Review 2007 25
Economic performance continued
The same concept is currently being applied to were treated, of which 2,7 million tons were mined the G100 mine in the south of MA1. These smaller by contractor B&E. Total waste removed in 2007 areas improve the management of sea walls and the amounted to 4,5 million tons. creation of clear workplace accountability on site. The mini-mines have contributed to the increased Orange River Mines also retained its NOSCAR status carat production and extended life of MA1. for the ninth consecutive year, and obtained OSHAS 18001 accreditation; it also retained its ISO 14001 Because of increased hauling distances, Wet In-Field status. It is worth noting that out of the top 100 mining Screens have been erected at the most northern companies in southern Africa, the Orange River Mines mines to decrease hauling and plant costs. The Wet were placed second for safety. The rehabilitation of In-Field Screening product is approximately 30% of old, worked out mining areas and management of the run-of-mine volumes. environmental impact on new areas continues to be The larger-than-expected average stone size a priority. MineSight, a mine planning software package, was contributed to a very good financial performance. The Orange River Mines introduced to assist with effective monthly plans. The increased stone size was mostly due to shortfalls from The Orange River mining area stretches from the Elizabeth Bay Mine: record performance Phase II upgrade of the primary crushing section was the land-based contractor being made up by additional Orange River mouth in the west to Sendelingsdrif Northern Areas Mines received its tenth consecutive successfully commissioned and the tonnage through production from the shallow marine operations. During in the east and currently focuses on the mining of NOSCAR, obtained OSHAS18001 accreditation put was ramped up to the design capacity of 800 the course of 2008, it is anticipated that the shallow ancient gravel terraces at Daberas. The current mining and retained ISO 14001 certification. It obtained the tons per hour. Minor punch list items are still to be marine sector will expand by 33% with the addition of plan indicates a remaining production life of two and number one position in the top 100 mining companies addressed in 2008. three more vessels. a half years at Daberas, ending in the second quarter in southern Africa in safety. No lost time injuries were of 2010. recorded during the year. The auxiliary tip had a lower than expected availability which resulted in a tonnage shortfall of 9%. The carat Pocket Beaches Phase 2 implemented Several diamond-bearing ore pockets have been However, overall resource depletion of the Orange The mineral resource department was able to add an recovery was 3% above the budget of 331 000 carats. identified and sampled in the area between Chameis River mining area is still in its infancy as only additional 150 000 carats to the resource in 2007. The This was the highest carat recovery for any value centre Bay and Bogenfels Arch. The first, Site 2, which Auchas and Daberas have been partially mined to crushing capacity of the Northern Area Sampling Plant in recent history. was brought into production in March 2004 using date; significant resources still remain at Arisdrift, (NASP) was improved by the installation of a mobile conventional mining methods and a mobile treatment Auchas Lower, Auchas (remnant mining), Obib and crusher unit as part of the flow sheet. A working 3-D In the continued effort to eliminate diamond theft, plant, was depleted during early 2007. Sendelingsdrif. A pre-feasibility study has been geological model has been introduced to manage the investigations by the security department uncovered a completed on the Sendelingsdrif deposit so that resource more effectively. 2007 saw high Mine Call syndicate operation – resulting in the discharge of two Phase 2, focusing on the mining of Site 11 and mining may start once Daberas is depleted. However, Factors (MCFs) in the first half of the year and low employees. Site 12 (which contain a number of rich areas), has current resource grade renders Sendelingsdrif MCFs in the second half, resulting in an average MCF commenced production during 2007. Concurrent with unprofitable. of 0,95. Northern Areas Midwater Production The management of the Epia/Trans Hex midwater mining dredging of overburden in the highly permeable water rich areas, conventional dry mining commenced in In order to better get a firm understanding of the grade The bulk of the run-of-mine material originated from contract was taken over by Namdeb from DBMN in other more accessible areas. of the resource at Sendelingsdrift, a sampling exercise the southern regions of the ore body, where bigger April 2007. The vessels mined 87 731m² of seabed and was initiated in 2006 which continued through 2007. stone sizes and high average grades occur. Due to its recovered 37 334 carats in 2007. This exceeded the Specialised cut-off wall technology is employed to form This exercise will only be concluded at the end of close proximity to the sea, dewatering of mine sites expected production by 33%. A new agreement was an active buffer, preventing uncontrolled seepage of sea 2008. Based on the success of the sampling results, a was a challenge, which was overcome with additional negotiated for a further period of two years. water into the mining blocks. These will be drained after full feasibility study maybe will be initiated that will lead pumping capacity. dredging and mined in the normal dry-mining fashion. to the construction of Sendelingsdrif mine. Beach and marine contractor operations In 2010, Sendelingsdrift may become the next mine in A new stripping contract of 1,8 million tons was Contractor operations recovered 29 776 carats in 2007 Although fully operational, production ramp-up is the Orange River Area. awarded to HPC Civils with RCC/Teichman continuing from the combined surf zone, shallow marine and land- slower than planned and technical challenges are with an additional 1,3 million tons. Blasting activities based operations. This was 1% below the expected receiving the necessary attention. In 2007, a total of 85 000 carats were recovered from continued as normal in the blocks where consolidated production. Daberas Mine. Altogether 6,1 million tons material was encountered. 26 Namdeb Annual Review 2007 Namdeb Annual Review 2007 27
Building a sustainable Oranjemund
About 10 years ago, Namdeb started a major initiative This will trigger the process of instituting a Local Authority of building a sustainable Oranjemund that will Council in terms of the Local Authorities Act of Namibia. The continue to exist independent of its mining operations. Council will be preceded by local authority elections under Building a positive legacy is one of the three strategic the guidance of the Electoral Commission of Namibia. We objectives of Namdeb’s business strategy adopted in expect the Local Council to be in place early 2009 while open 2007 and the sustainability of the town forms a key access and land transactions can only take place after the initiative under the positive legacy leg of the strategy. Local Council is instituted.
In 2004 Namdeb registered Oranjemund Town Two major issues that might delay the institution of the Management Company (Pty) Ltd (OTMCo), a wholly- local authority are the agreements between Namdeb and owned subsidiary of Namdeb, as a vehicle to drive Government on asset transfer, maintenance and operation, the sustainability initiative and secure a long-term and the proclamation of the Oranjemund-Rosh Pinah road to future for the town. Together with senior Namdeb link Oranjemund with the rest of Namibia. management and the Mineworkers Union, the residents of Oranjemund and local businesses are fully Diversify economic base represented on the board. The Namdeb Board has approved N$5 million to investigate alternative sustainable economic opportunities that can The purpose of the OTMCo is fourfold: support the town and create alternative employment prospects. Following an open tender process, three • To implement and manage the town consultants were appointed to conduct feasibility studies for establishment process to declare Oranjemund the development of: as a Local Authority in terms of the Local Authorities Act (Act 23 of 1992); 1. Mari-culture in the mined-out ponds; • To initiate and develop a diversified economic 2. Tourism; base for Oranjemund to ensure that the town will continue to exist without the mining activity; 3. Agriculture; and • To build capacity for effective town 4. Secondary school and technical training centre management and administration to ensure that when the Local Authority is established, The feasibility studies for mari-culture, tourism and agriculture the town has the necessary knowledge, are completed while the study on the secondary school skills and experience for a smooth transition and technical training centre will be completed in August from a mining town to a local authority; 2008. The remainder of the N$5 million is earmarked for an • To administer and manage well-established integrated mariculture pilot project in one of the mined-out municipal and other related services as ponds. A submission was made to the board to approve the a forerunner of a local authority. pilot project. The tourism potential of the town has already attracted interest from large scale private investors to develop Town establishment significant tourism products and services. The town establishment process will create property rights and institute a Local Authority Council to Capacity building and effective town management promote town sustainability as it will create security OTMCo has continued to develop local municipal skills of tenure and facilitate open access to Oranjemund. while educating the community through several formal and informal sessions on their civic responsibilities once the Local Oranjemund will be ready in September Authority Council takes over the management of the town. The 2008 to be proclaimed as a town in terms involvement of the community has increased significantly over of the Town Planning Ordinance. the last two years with more than 100 community members attending each of the last two formal sessions. 28 Namdeb Annual Review 2007 Namdeb Annual Review 2007 29
Preferential procurement
Preferential procurement helps ensure that mining Specific guidance on the identification and revenues stimulate growth in other sectors. It also prioritisation of historically disadvantaged helps offset historical economic inequalities. local suppliers is given through Namdeb's preferential procurement policy that requires Procurement arrangements form a critical the accreditation of a supplier’s BEE status. component of the De Beers strategy for driving economic development wherever it Preference is given to enterprises owned by operates. Procurement policies and procedures HDNs, BEE enterprises and Namibian enterprises. are highly developed in Namibia. The Namibian Preferential Procurement Council (NPPC) is working with the government to Each of our operations also works with existing develop consistent HDN criteria and guidance. suppliers to assist them in their transition to becoming BEE-owned and “transformed” In 2007, Namdeb spent US$7,8 million with HDN- businesses. The Namdeb BEE Policy provides owned, empowered and influenced businesses. guidance on how the company can contribute to This expenditure is likely to increase as the national Namibian transformation requirements and the framework is progressively implemented. national Vision 2030 development strategy.
It aims to foster a culture of entrepreneurship among historically disadvantaged Namibians (HDNs), promote the development of commercially viable and sustainable businesses, and facilitate the transfer of capacity to Namibian suppliers.
Namdeb: Value of spend - accredited vs not yet accredited suppliers Jan 07 - Dec 07
Millions
NAD 100
NAD 90
NAD 80
NAD 70
NAD 60
NAD 50
NAD 40
NAD 30
NAD 20
NAD 10
NAD Jan-07 Feb-07 Mar-07 Apr-07 May-07 June-07 July-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07
NPPC accredited Not yet accredited 30 Namdeb Annual Review 2007 Namdeb Annual Review 2007 31
Social performance
During the year under review, Namdeb improved A model union relationship benefits to its employees by; The Mineworkers Union of Namibia (MUN) is the recognised union in the mining industry and most • Allowing employees on one-year, fixed term of Namdeb’s employees (69,1%) are members. contracts to be registered as members of the During the year under review, Namdeb and Provident Fund. MUN signed an occupational safety, health and • The introduction of the Sida Ei !gûs incentive environmental (SHE) Agreement which is aimed to scheme by incorporating all other schemes into set down principles and procedures which shall one team based scheme for all employees from govern the relationship in respect of SHE matters. A-band to D-band. Twelve bursaries were awarded for the year Some N$710 000 was spent in 2007 on twenty-nine 2008 in the fields of engineering, control and full-time employees who were on developmental Namdeb has introduced the policy on voluntary and instrumentation, metallurgy, mining, administration programmes. These programmes prepare them to random testing for alcohol and drugs. This policy has and geology. This takes the total value of Namdeb be appointed to positions held by non-citizens, and Total employees per work area a preventive emphasis in the form of early detection bursaries in the year ahead to N$2 million. to enhance their supervisory and training skills. Mining Area 1 2 429 and rehabilitation. This initiative will improve safety Orange River Mining 249 conditions at Namdeb and will also undoubtedly Namdeb also operates a grant scheme which Technical training also plays an integral role Northern Areas 262 have a positive spin-off on the quality of work and provides financial assistance – with no payback at Namdeb. Training for artisans, mining and Head office 42 family life which we at Namdeb strive to nurture in obligations – to deserving Namibians who wish metallurgical operators is on-going to ensure that Total 2 982 accordance with our values, especially that of care. to further their studies. As of 2007, a decision we keep abreast of technological advancements. Status of employees was undertaken to allocate the grants twice a Considering the travelling times for our employees Technical training also plays an integral role Citizens 2 880 year to benefit more deserving Namibians. who work continuous operations at our Orange at Namdeb. Training for artisans, mining and Permanent residents 63 River Mines, Namdeb applied to the Ministry of An amount of N$415 813 was contributed metallurgical operators is on-going to ensure that Expatriates 39 Labour and Social Welfare for an exemption from towards tuition fees for meritorious Namibian we keep abreast of technological advancements. the seven-days-on–seven-days-off regulations, to students studying at various institutions in different In 2007 N$676 581 was spent on Namdeb Employment type allow 14-days-on-14-days-off. With due regard fields. During 2007, 187 people benefited from artisans through various external courses. Permanent 2 435 to employee safety on the road, the company the scheme. N$129 865 of this was awarded Fixed term-contractors 547 extended the mustering point from Keetmanshoop to 73 dependants of Namdeb employees. During the year under review 50 job attachments Contractors 54 to Tsumeb. This change enabled employees to from Namibian institutions such as NIMT, Valombola Temporary 56 spend longer periods with their families back home. Both the bursary and grant schemes supplement Vocational Training Centre, Windhoek Vocational Total 3 092 talent management and are aligned to the human Training Centre and the Mechanical Training Institute Building our skills base resources development element of Vision 2030. were accommodated. In September 2007, 25 trade Labour turnover Namdeb is committed to the development and bursars were offered bursaries as electricians, diesel 2002 11,0% enhancement of critical mining skills. Thirty- There are various training and development mechanics, millwrights and fitter and turners. 2003 6,7% three young Namibians are currently sponsored initiatives ongoing at Namdeb. The Namdeb Self 2004 9,1% (total turnover) by Namdeb at tertiary academic institutions Study Assistance scheme encourages employees A highlight of 2007 was the Sida !nans 6,2% (excluding voluntary separation) in southern Africa, pursuing studies in various to further their studies in fields of their choice; on teambuilding and diversity training intervention. 2005 6,0% technical disciplines core to Namdeb’s operations. successful completion, they receive 87,5% payback This resulted in a better understanding of 2006 9,7% (total turnover) of the money they used to study. Approximately diversity and improved teamwork and cost the 5,0% (excluding dismissals and During the year under review we sponsored 27 N$150 000 was spent on employees in 2007. company about N$3 million. Employees from the retirements) bursars of which 25 were historically disadvantaged Managing Director down to the lowest category 2007 13,0% (total turnover) and nine were female. Ten designated group Namdeb collaborates with the Maccauvlei of employees have attended this training. 6,0% (exclude dismissals, bursary-holders completed their studies and Learning Academy to develop employees. The first retirements and voluntary took up employment with Namdeb as graduate programmes were introduced in the early 1990s and separations) trainees. Another five are in their final year of to date approximately 250 employees have gone studies and will commence work in 2008. through these programmes. 32 Namdeb Annual Review 2007 Namdeb Annual Review 2007 33
Social performance continued
In support of harnessing talent, the young Managing these risks requires stringent professional’s forums have proved to be hugely adherence to standards developed to ensure successful. Such forums allow our graduates from safe conditions and efficient operations. It also all disciplines the opportunity to share and learn requires a culture of safety consciousness and from each other as a peer group, as well as from safe behaviour by the workforce, reinforced by the senior managers who share their experiences. We participation of management, systematic training have approximately 30 Namibian employees in our and regular internal and third party audits. employment who fall within this category at any given time. Their disciplines range from technical Preventing fatalities areas of mining, engineering, metallurgy, and mineral All incidents are thoroughly investigated and resources to those of human resources and finance. reviewed with a clear view to achieve our zero fatalities target. During November 2007, Namdeb Safety recorded six million fatality-free shifts. Our principles require all Namdeb operations to adhere to national safety legislation and work Management systems towards best practice safety standards such as All Namdeb operations have five-star platinum OHSAS 18001 and the NOSA Integrated Safety, and NOSCAR status on the NOSA Integrated SHE System. Since 2005 all our operations Health and Environmental System. We work with have been listed on the NOSA International regulatory agencies, employee representatives Top 100 Mining Companies list and in 2007 and local communities to promote partnership Elizabeth Bay Mine was awarded first position on safety issues and enable a supportive and with Orange River Mine as runner up. accident-free safety culture. All employees and contractors follow health and safety practices During November 2007 Namdeb achieved a consistent with our health and safety policy. We new milestone by obtaining OHSAS 18001 conduct regular internal and external health and certification. The current Lost Time Injury safety audits to evaluate our performance. Frequency Rate is 0,17 (per 200 000 hours).
Key risks We require contractors to adhere to the same All occupational health and safety risks are managed standards as our own employees; contractors through ongoing hazard identification and risk are required to attend induction programmes assessments, as well as implementation and before working on mine sites. When contractors monitoring of control measures to reduce such are found to have insufficient skills or knowledge risks. A Namdeb risk log is kept for all identified of our health and safety procedures, they are risks. The six top safety risks have been identified provided with the appropriate training before Engaging employees as follows and are managed through critical being permitted to work. Contractors commit to Formal mechanisms for engaging and building Namdeb has a safety and health agreement with the procedures and emergency response plans: our safety policy when entering into contracts, employee awareness on safety issues include Mineworkers Union of Namibia which allows for a and are monitored on performance. management briefing sessions, mine wide notices, communication structure within the company, at various • Vehicles safety alerts, refresher safety inductions, “stop levels, which culminates in a communication forum • Isolation/electricity In the quest for ever-increasing safety, the Alcohol production for safety” sessions, videos, posters, involving all representatives at senior management • Height work and Drug Abuse Management Programme safety campaigns and formal safety meetings. level. Two full time safety and health representatives, • Confined space work introduced random and voluntary testing The aim of these meetings is to discuss issues of elected by the workforce, are employed and each • Lifting operations during 2006; this has delivered positive results concern to employees and determine how they business and functional unit workplace safety and • Flooding with a significant decrease in alcohol related should be addressed. Issues that are not resolved health representative is elected and appointed in vehicle accidents over the past two years. may be escalated to the Safety Committee. line with the Safety and Health Agreement.
34 Namdeb Annual Review 2007 Namdeb Annual Review 2007 35
Social performance continued
Namdeb Social Fund (NSF) donation highlights • ETSIP: N$200 000 towards the GRN education Namdeb has successfully helped to develop Namibian initiative society through its substantial investment in social, • Gobabeb Training and Research Centre: N$150 educational and environmental projects. Millions of 000 donation towards the centre’s research and Namibian dollars have already been spent on projects training activities ranging from the largest of beneficiaries to the support • Helena van Rijn Primary School in Lüderitz: of small business initiatives. Namdeb remains the N$87 000 sponsorship towards the purchase largest corporate responsibility contributor to the of a school mini bus socio-economic development of this beautiful nation. • Institute for Domestic Science & Agriculture: Beneficiaries of NSF donation to CLaSH for “Operation N$87 000 purchase of training equipment for Omakutsi”, which is middle ear surgery to restore Every year, the NSF donates well over N$1 million and the institution hearing to patients has since its inception in 1994 donated in excess of • Michelle McLean Children’s Trust: N$60 500 N$25 million. This contribution has significantly aided sponsorship towards the Grade 12 financial N$ skill training in the Caprivi and Karas regions the development and prosperity of Namibian society in Education 1 221 225 line with the fund’s vision to be the leading Namibian • Martin Luther High School: N$57 000 for Health and welfare 556 000 corporate social investment fund. purchasing of chairs in their assembly hall • Orison Educational Services: N$50 000 Community development 396 852 Bicycles and packs donated by the NSF to volunteers This social investment reflects a fundamental sponsorship of the National Mathematics Small business development 350 000 at Cheshire Home Anamulenge commitment by Namdeb to good corporate Congress 2007 Youth & development 135 000 citizenship; also it complements and extends • WorldTeach: N$50 000 sponsorship of teacher Public affairs 400 000 volunteers the far larger contribution to Namibia’s economic Sports 73 840 development, which the company makes through Public affairs (N$400 000) E/Bay Discretionary Fund 150 000 its successful business activities. Health and Welfare (N$556 000) Ministry of Trade and Industry: N$200 000 • NDTC: N$100 000 sponsorship of Project Etango sponsorship of the trade and investment conference NamGem Discretionary Fund 50 000 • Health Unlimited Namibia: N$100 000 In 2007, the fund invested more than N$3,3 million in National Park Etosha Centenary Project: N$100 000 Total 3 332 917 forty projects and institutions from all over the country. sponsorship of adolescent sexual reproductive towards the production of a map and tour guide programme PALDIF: N$50 000 donation towards the foundation Education was the biggest beneficiary at 36%, • Dr Christine Swart Opperman AIDS Orphan LSI Foundation: N$50 000 donation towards the followed by health and welfare (16%), community Trust: N$50 000 towards the charity orphanage's foundation development (12%), public affairs (12%), and small activities business development (11%). Other beneficiaries were • Verna’s Academy of Dress Design: N$50 000 Small business development NSF donation summary Jan-Dec ‘07 in the categories of youth & development, and sports. sponsorship of the academy’s annual activities (N$350 000) 5% 2% • Cancer Association of Namibia: N$50 000 • Namibia National Chamber of Commerce: 2% The following are some highlights of projects that sponsorship of the association’s activities N$200 000 sponsorship of the SME toolkit via Education 12% received significant donations in their respective Oshipe Health and Welfare categories: Community development (N$396 852) • Oshipe: N$80 000 sponsorship of the franchise 36% Community Development • Aus Community Conservation Trust: N$200 000 conference 4% Small Business Development Education (N$1 221 225) donation towards the water recycling plant • Elephant Craft Centre: N$70 000 towards Youth and Development • Waldorf School Windhoek: N$200 000 donation • Municipality of Karasburg: N$100 000 purchasing of the dust collecting equipment and Public Affairs towards the purchase of equipment for the sponsorship of computer equipment for the raw materials 11% chemistry and science laboratories council Sports • Southern Cluster: N$200 000 towards the • NACOBTA: N$61 852 sponsorship of the Sports received N$73 840, Youth and development E/Bay Discretionary Fund construction of two classroom blocks for the production and marketing of material on rural N$135 000 and the E/Bay and NamGem discretionary 12% 16% NamGem E/Bay Discretionary Fund secondary school in Lüderitz tourism funds received N$150 000 and N$50 000 respectively. 36 Namdeb Annual Review 2007 Namdeb Annual Review 2007 37
Environmental performance
ISO 14001: 2004 certification Year Major Moderate Minor Near-miss Namdeb is ISO 14001 certified for all activities, 2004 0 17 90 30 products and services that the organisation controls 2005 0 7 106 21 or influences that have or can have a significant 2007 0 15 113 10 impact on the environment, related to Mining Area 2007 0 6 63 15 1 (Mining, Treatment, Mineral Resources, Waste Management and Engineering Departments), Elizabeth Environmental incidents Bay Mine, Orange River Mines and Exploration. No major environmental incidents occurred and no fines were incurred during 2007. Moderate The South African Bureau of Standards (SABS) environmental incidents included mostly fuel and conducted an ISO 14001 surveillance audit during lubricant spillages. Incident trends are recorded to November 2007. Continued compliance of the aid the investigation process, which includes ISO 14001:2004 Environmental Management determining root causes and drawing up mitigation System (EMS) of Namdeb was confirmed. Non- plans. Whenever it is necessary, internal standards conformities recorded were related to legal issues are reviewed as part of the corrective action. Sites are and operational practice and progress with established in Namdeb’s licence areas to remediate environmental management plans. All the findings contaminated soil. Various designs are tested to were classified as minor. Conclusions were that the system had been improved, management determine an effective remediation process. actions had been taken, and personnel were keenly committed to maintaining and improving the system. Environmental expenditure The total environmental expenditure for 2007 is The complement of environmental staff at N$9 021 728. This includes working costs, capital the operations was increased to ensure the projects and environmental sponsorships. These costs effectiveness and maintenance of the EMS to the are for environmental research, rehabilitation, water ISO 14001 requirements. A detailed, fast-track management, waste management, environmental orientation and development plan was developed personnel, environmental training, administration, to assist with the training of the new recruits. environmental management systems and consultancies.
Environmental incident type trends for 2007
54% Spillage of fuel and lubricants 0% Release of hazardous substances into (outdoors and > 25 litres indoors) the environment (e.g. paint, fluoresent tubes, batteries, radiation sources 0% Incorrect waste seperation 18% Spillage of fine tailings (slimes)
1% Illegal dumping and littering 4% Spillage of effluent (e.g. sewage)
16% Wildlife and plant incidents 4% Misuse of natural resources (e.g. (disturbances, collection, water, electricity) killing/hunting illegalor illegal fishing) fishing) Identifying plants of conservation importance 0% Disturbance of historical, 2% Other environmental incidents in areas to be mined is the first step in paleontological and archaeological sites developing practical management actions 1% Uncontrolled driving off existing tracks and roads 38 Namdeb Annual Review 2007 Namdeb Annual Review 2007 39
Environmental performance continued
Fresh and sea water consumption in 2007 Fresh water consumption in 2007 A baseline survey was conducted for monitoring the Namdeb re-uses oil by burning this to generate heat environmental effects of sediment discharges from the for drying gravel during the sorting process. Some 4% 10% Uubvlei treatment plant on sandy beach and rocky oil is recycled. Employees are briefed regularly on inter-tidal biota in Mining Area 1. The monitoring of the need to save energy, and labour shift systems 29% environmental effects of Pocket Beach mining on sandy have now been adapted to enable energy savings. beach and rocky inter-tidal biota continued. A baseline survey was conducted of the near-shore marine Initiatives to manage the mining footprint benthic communities in the Bogenfels area. The annual Namdeb’s rehabilitation plan was finalised at the end monitoring survey of inter-tidal and sub-tidal rocky of October 2007. Seven pilot projects were devised shore communities at Elizabeth Bay also continued. to more accurately cost the tasks of rehabilitation to 65% 6% feed into the detailed cost estimate for the March Risk assessments were conducted for the 2008 board meeting. 86% Large Diamond Recovery (LDR) project and the Geological Sampling Recovery (GSR) project. The first of the pilot projects have been completed Mining fresh water Mining fresh water and signed off. These were the rehabilitation of Town water Re-used/recycled water Energy consumption and overburden dumps and mined areas at Auchas and Mining seawater Town water greenhouse gas emissions disturbed areas along the road from Sendelingsdrif to Environmental Expenditure Namdeb’s main energy consumption is Oranjemund. The other pilot projects in Mining Area 1 related to fuel used in its earthmoving and along the road from Oranjemund to Lüderitz Costs (N$) 2007 and vehicle fleet, and in generators. are ongoing. Costs Environmental Expenditure (N$) 2007 assessed and included in the mine life cycle from Capital Costs 5 406 075 the exploration phase to the closure of a mine. Working Costs 3 496 415 Sponsorships 119 238 A site visit was undertaken by the Environmental Total 9 021 728 Department of De Beers RSA Group Services to the Group Exploration Namibia Project in the Water consumption Caprivi. The visit was aimed at assessing risks Namdeb uses mainly sea water (86% of the total associated with the exploration activities and water consumption) and only a small portion developing mitigation plans. Other objectives of non-potable water for its mining operations. included the initiation of an environmental Processing plants recycle a large portion of their monitoring and reporting programme and the water. Only one third of the consumed fresh water introduction of the Exploration ECOHS guidelines. – all abstracted from the Orange River – is used for mining operations; the remainder is for domestic De Beers Marine Namibia, on behalf of consumption. Some six percent of the freshwater Namdeb, awarded a contract to the Centre for is recycled and re-used for the watering and Scientific and Industrial Research (CSIR) for: maintenance of public parks and the local golf course. • reviewing and updating the Atlantic 1 Mining Licence Impact assessments and monitoring Environmental Management Programme Report; The Environmental Impact Assessment (EIA) • developing an Environmental Impact Assessment process is conducted in all Namdeb’s operations and Environmental Management Plan for to enable the company to identify various potential Mining Licences 128 A, B and C; and environmental impacts at an early stage of a • conducting an Environmental Impact project, operation, mining or prospecting activity. Assessment and developing an Environmental Management Plan for the feasibility phase The effects of disposal of fines into the ocean is Namdeb has dedicated internal human resources of the Marine Dredging Project. monitored in long-term studies of marine organisms to ensure environmental requirements are All three contracts are still in progress. 40 Namdeb Annual Review 2007 Namdeb Annual Review 2007 41
Environmental performance continued
Partnering with governmental and private institutions publications, contributions to park management and has enabled Namdeb to go beyond simply complying tourism consultancies, as well as park infrastructure with minimum legal requirements. The Millennium Seed and joint awareness events are some of the initiatives Bank Project, under the umbrella of Namibia’s Ministry in which Namdeb has partnered with SKEP. of Agriculture, Water and Forestry and Royal Kew Botanic Gardens in London, assists with developing Namdeb participates in the six-monthly bird surveys in restoration techniques. Rehabilitation planning is co- the Orange River Mouth wetland which is a Ramsar site. ordinated with the Ministry of Environment and Tourism’s Namdeb also supports the removal of alien vegetation planning for the future national park and ministry staff in the wetland by Raleigh International in collaboration is directly involved in Namdeb’s rehabilitation projects. with the Ministry of Environment and Tourism.
An inter-ministerial committee has been mandated An established marine monitoring programme in licence by the Namibian Government to provide input areas adjacent to the Namibian coastline ensures that to Namdeb’s strategic business and closure impacts and recovery rates of marine biota in inter- plan. A familiarisation visit took place in 2007. tidal and sub-tidal environments are investigated.
A rehabilitation programme is presently being Stakeholder engagement developed which will schedule rehabilitation To share, determine and improve on best environmental activities over the coming years. management practices, stakeholders from governmental and non-governmental organisations Biodiversity conservation in Namibia and South Africa were engaged during In recognizing its responsibility to mitigate the impacts the year. These engagements were conducted of mining on the environment, Namdeb supports a via workshops, information sharing forums, ad number of conservation projects in the Sperrgebiet. hoc technical meetings, joint partnerships, liaison meetings, site visits, environmental clubs, and regular Namdeb sponsors a research project which environmental articles in the Sperrgebiet Gazette, analyses the possible impacts of mining on the as well as telephone and email discussions. productivity of the Damara tern, a flagship species to the Namibian coast. This study also allows for the full-scale study of the birds biology and behaviour, which would contribute to a better understanding of this small sea-bird. The study also aims to provide conservation-relevant outputs for the breeding areas.
Namdeb continues to support the Brown Hyena Research Project to assess the potential impact of mining on brown hyena movement and activity. Brown hyenas are fitted with latest-technology GPS collars and data are downloaded to track their movement. This provides insight into their activity pattern and habitat uses. Should any changes in their behaviour be detected due to human disturbance, mitigation measures will be employed. One of the many rehabilitated areas on our west coast operations Namdeb also actively contributes to the Succulent Karoo Ecosystem Programme (SKEP). Joint 42 Namdeb Annual Review 2007 Namdeb Annual Review 2007 43
Associate De Beers Marine Namibia achieves companies another record production year
DBMN mined 5,3 km² and produced 1,05 million 2005, whereas the offshore Atlantic 1 sampling was carats (3% up on 2006) against the original budgets conducted in new targets identified with low resolution of 5,1 km² and 970 000 carats respectively. This geophysical surveys. A total of 30 days of exploration was, for the fifth time in a row, a record annual carat sampling has been planned for 2008. production from the Atlantic 1 marine mining license. DBMN made history when production exceeded one Safety, health, the environment and security million carats for the first time in 2006. The exceptional A solid safety performance performance in 2007 was mainly due to resource DBMN retained its NOSCAR, ISO 14001, ISM and performance and efficiency improvements. OHSAS 18001 certifications. The Lost Time Injury Frequency Rate achieved for 2007 was 0,17 – resulting During the year under review, DBMN successfully from two lost-time injuries. upgraded the mv Debmar Atlantic from a 500mm to a 600mm mining system at a capital cost of Health N$350 million. DBMN also constructed and During 2007, DBMN implemented regular drug and commissioned a second crawler for the mv Ya Toivo alcohol testing at the work place. at a capital cost of N$100 million. A fourth prevalence survey was held during the period Resource Development under review, covering 97% of all DBMN employees. Pre-production sampling The company conducts prevalence surveys every Pre-production sampling in 2007 in the Atlantic 1 second year, to determine the HIV-infection rate, and mining licence totalled 40 days during which 398 adapts its strategy according to the results. samples were collected by the mv Coral Sea. The On-site voluntary counselling and testing (VCT) sampling focused on the development of existing continued to make a difference during the year under production and the testing a new sampling tool. Fewer review. DBMN makes anti-retroviral therapy available sampling days were undertaken in 2007 than in 2006 free of charge to all affected DBMN employees and as the company reserve levels were in excess of the their life partners. On-site baseline screening check-ups required minimum level. A large sampling campaign are also in place to assess and educate employees on totalling 296 days is planned for 2008 to bring reserve chronic and acute illnesses. levels in line with the company’s future revised strategy. Environmental responsiveness In addition to the above, 702 samples were acquired The ISO 14001 Environmental Management System in 36 days by the mv Douglas Bay in the same licence surveillance audits were completed successfully during area. The sampling was focused on generating 2006 and 2007. resource in a new production node. A total of 166 days of mv Douglas Bay sampling is planned for Various developments related to the Marine Dredging Resource generation in 2008. Project took place during the period under review:
Exploration sampling • During 2006, Enviro-Fish Africa (Pty) Ltd completed Exploration sampling in 2007 in the Atlantic 1 licence the pre-feasibility phase of the Atlantic 1 dredging totalled 30 days during which 372 samples were trial environmental impact assessment (EIA) collected by the mv Douglas Bay. The sampling was and management plan review and update. The focused on the mud-belt and offshore Atlantic 1, environmental clearance certificate for this pre- where 15 days of sampling were conducted in each feasibility phase was obtained from the Directorate of these areas. The sampling within the mud-belt was Environmental Affairs of the Ministry of Environment a follow-up on previous exploration programmes in and Tourism in 2007. 44 Namdeb Annual Review 2007 Namdeb Annual Review 2007 45
Associate companies continued • In mid-2007, the Centre for Scientific and Industrial deck cadets, trainee technicians, marine electricians, Research (CSIR) was appointed to: i) conduct an trainee production drillers, trainee crawler pilots, EIA and develop an Environmental Management apprentices, officers on full time studies and ratings Plan (EMP) for the feasibility phase of the Marine in training and graduate trainees. In addition, DBMN Dredging Project; ii) review and update the Atlantic focus on ensuring that our leaders in the company are 1 Mining Licence Environmental Management adequately skilled with management skills. Programme Report (EMPR); and iii) develop an DBMN also awards bursaries on an annual basis EIA and EMP for Mining Licences 128 A, B and C. including one bursary to the most deserving science These reports are currently under review, prior to student – the Diamond Award for Science. submission to the authorities for approval. Diversity The 2006 benthic samples were analysed during During 2007, a follow-up diversity survey was 2007. As part of the company’s initiative to streamline conducted among the DBMN workforce. This survey environmental research and monitoring programmes aimed at tracking progress made with the company’s to better determine and understand the potential diversity project – Kopano Dantago ("Together we impact and recovery of mining areas. The approach will win"), which was implemented during the period to and purpose of the benthic surveys were revised under review. The survey showed an improvement together with the benthic specialist during 2007. As in the understanding of diversity issues. The results a result, the number of impact and control sites was have been analysed, and further action is planned increased from three sites to 22 sites in the Atlantic 1 for 2008 to further improve diversity awareness and mining licence area. relationships within the company.
The annual benthic sampling survey for 2007 was Positive labour relationships based on this revised sampling plan and a total of The relationship between DBMN and the Mineworkers 563 samples were collected for faunal and sediment Union of Namibia continued to be constructive during analysis from Atlantic 1 (22 sites) and the mid-water the period under review. As part of this relationship, areas (eight sites) off Bogenfels, Chamais and Kerbe the company and the union concluded the 2007/2008 Huk. It is the first time that such a large sampling Substantive Agreement that provided for the increases spread was achieved for Atlantic 1 and this effort may to basic salaries of employees in the bargaining unit. yield useful baseline results. No labour disputes, strikes or demonstrations were During 2007, an environmental GIS database was recorded during the period under review. initiated. The immediate to long-term objective of this was to re-visit both current and historical data stored Social responsibility on the environmental data drive, and to collate all The DBMN operations take place offshore, so there data that can be spatially depicted. This will make are no communities in the immediate vicinity of environmental data more easily accessible for other operations that are directly affected by it. However, disciplines such as mine planning and strategic it is the company’s belief that as a corporate citizen projects. of Namibia, it should do its best to contribute to the upliftment of society as a whole, and this is done Protecting the national resource through the DBMN Social Responsibility Committee. One employee was dismissed for breach of trust whilst a total of three diamonds (3,45 carats) with a value of During 2006 and 2007, DBMN donated approximately N$18 478 were recovered. Continuous improvement N$300 000 per annum to worthy causes. Beneficiaries in security systems and training of security personnel included the Friendly Haven Shelter for Abused is ongoing. Women and Children, the Aquaculture Information Campaign and the Katutura Hospital. Human Resources Skills development DBMN has career paths and development initiatives for various core skills, including engineering and 46 Namdeb Annual Review 2007 Namdeb Annual Review 2007 47
Associate companies continued
Namibia Diamond Trading Company Together with Old Mutual, the objectives In 2007, the sales contract renewal negotiation for 2008 include the setup of four was successfully concluded with the birth of a new additional centres country-wide. company, Namibia Diamond Trading Company (NDTC). NDTC will, for the first time, sell diamonds A difficult year for the rough market from Namdeb’s production as well as an aggregated 2007 was a difficult year, with stocks and bank London mix directly to the local cutting and polishing indebtedness increasing by mid to high single industry. The contract will last until 2013, during digits. Liquidity and cash flow were major focal which time the effects of beneficiation will no doubt points throughout the year as retailers squeezed impact positively on the Namibian economy. manufacturers on price and terms. As a result, prices softened in the stock growth areas for the first time NDTC completed the valuation and sale of since the late 1990s. Prices for larger, better-quality 2,06 million carats produced by Namdeb goods remained firm as demand outweighed supply. – a decrease of 5% on 2006. Polished market – mixed reports As part of a group-wide De Beers effort to combat In the US, high-end polished stones clearly out- the effects of negative publicity that could affect performed the middle and lower-end segments. This consumer confidence – particularly in the light of the culminated in high-end jewellers and some large chain release of the movie ‘Blood Diamond’ – a vigorous stores reporting that expectations had been met or worldwide campaign was launched. In Namibia, a exceeded, while other chains and independents were national campaign entitled ‘Diamonds for Good’ softer. Asia Pacific ended the year on a positive note, was launched by the Minister of Mines and Energy, with some retail chains reporting 10% growth year-on- Honourable Erkki Nghimtina. Namdeb contributed year, despite the low growth of 2% in the first half. to the national campaign through media and stakeholder engagement, as well as internal employee communications across the group. Information packs focused on the indelible contribution that diamonds, combined with good government, have made to the development of Namibia. Packs were distributed to key stakeholders in government and tourism, as well as local jewellers and business sectors.
The media campaign included adverts with key ‘Diamonds for Good’ messages placed in all local newspapers and publications, and on outdoor media around the country at strategic locations.
Sharing diamond wealth with less privileged Namibians The year under review was a busy year for the NDTC’s project Etango. In addition to setting up two more centres in Rundu and Keetmanshoop, the NDTC welcomed Old Mutual Namibia on board as partner in the project. 48 Namdeb Annual Review 2007 Namdeb Annual Review 2007 49
Associate companies continued
NamGem Namdeb Properties NamGem, the diamond-cutting and polishing factory, Namdeb Properties is a wholly-owned subsidiary of is a wholly owned subsidiary of Namdeb. Namdeb and Namdeb and owns the Namdeb Centre, in Windhoek, Lazare Kaplan International (LKI) are in the process of where the Namdeb head office is situated. Other negotiating the renewal of the partnership, this time on De Beers group companies, such as the NDTC, an equity basis. The partnership was formed to build De Beers Marine Namibia, De Beers Namibia and expertise and improve performance, particularly in the Diamdel (Namibia), are also accommodated here. marketing of NamGem’s products. The Namdeb Centre is a showcase for the company and is a well recognised landmark in Windhoek. Improved manufacturing capacity The addition of a new preparation unit in 2005 bore Exclusive Properties fruit in 2007; the company is now able to produce Exclusive Properties is a wholly-owned subsidiary of manufactured goods throughout the pipeline, Namdeb Properties and owns a housing estate called from planning and laser-sawing to polishing. Valco Village in Ludwigsdorf, where 38 houses are let to company employees, employees of associated As a result, manufacturing capacity has improved companies and private tenants. dramatically and the company is now able to produce different types of goods, including makeables and large stones (manufacturing capacity improved from a maximum size of two to ten carats per stone). The company plans to recruit an additional 80 polishers in 2008. This will improve the productivity and will also lead to further employment creation in Okahandja.
Social impact NamGem remains a major source of employment for the town of Okahandja and a valuable social partner within the wider Namibian community. The company employs 136 people, but its direct and indirect economic effects are felt by an even greater number of people.
Local beneficiation During 2007, NamGem production was made available to a number of outlets in Namibia, including retailers and members of Jassona (the Jewellery Association of Namibia).
Equity deal in the pipeline The company shows the potential to become a global player. The technical partner, LKI, has also indicated that it wishes to take up equity in NamGem. Negotiations, which were initiated in 2007, are continuing and are expected to be concluded by the end of 2008. 50 Namdeb Annual Review 2007 Namdeb Annual Review 2007 51
Corporate Code of business conduct governance and ethics in place
Board of directors Namdeb executive management committee Namdeb’s board of directors consists of eight This committee represents all disciplines in non-executive directors, five alternate directors the company and, under the leadership of the and a full-time managing director. Directors are managing director, manages the company’s appointed by shareholders, each of whom is entitled key result areas at executive level. to appoint four directors and four alternates. All directors have unrestricted access to all company Internal audit information, records, documents and property. The Internal audit’s role is to give comfort to management board meets three times a year or more frequently if and the board that risks are being properly identified, required. The managing director is appointed by the managed and controlled. Risk-based audit plans board and is an ex officio member of the board. are prepared annually and are approved by the audit committee. Formal reports by the different levels are Board management committee collated and the managing director annually reports The Namdeb management committee is a to the shareholders on all material risks encountered. sub-committee of the board and consists of six non-executive members. It meets three Managing business risk times a year. The shareholders are equally The board is ultimately responsible for risk management. represented at management committee level. Management is accountable to the board for designing, implementing and monitoring the process and Audit committee integrating it into the day-to-day activities of the The governance and assurance committee, company. It is management’s responsibility to ensure tasked with the responsibility of monitoring the that all business risks are appropriately identified, control environment, is in place and functioning recorded and managed. The risk-management process well. The internal audit services manager and involves the identification of objectives and relevant risks. the senior partner in charge of the external audit Controls mitigating these risks are then documented attend all meetings. They have unrestricted and evaluated to determine any residual risk. access to the chairman of the audit committee. The process results in the top risks of the The audit committee assists the board in company being managed at executive level discharging its duties, which are to ensure that and reported to the board of directors. adequate internal controls and systems are in place for the reliability of the financial results Code of business conduct and ethics and accountability for the company’s assets. A code of business conduct and ethics is in These meetings also consider risk management, place and requires all employees to subscribe internal controls systems, fraud and theft. to high moral, ethical and legal standards.
Remuneration committee This is a joint shareholder body responsible for approving recommendations for annual salary increases and incentive schemes. The shareholders are represented by two non- executive members from each shareholder. 52 Namdeb Annual Review 2007 Namdeb Annual Review 2007 53
The board of directors is responsible for governance, group policies and the provision of reliable information to the two shareholders. It is led by non-executive chairman Nicky Oppenheimer, and non-executive deputy chairman Joseph Iita. Board of Deliberation is encouraged on all matters requiring the attention of the board, although board members, in terms of the Shareholders’ Agreement, do not have individual voting power. Directors have no fixed term and are appointed and withdrawn by the two shareholders respectively, in accordance with the directors provisions of the agreement.
Tuli Hiveluah Vicky Niku-Paavola Teckla Lameck Alternate Director Alternate Director Alternate Director
Inge Zaamwani-Kamwi Nicky Oppenheimer Joseph Iita Managing Director Chairman Deputy Chairman
Daniel Kali Robin Mills Erasmus Shivolo Alternate Director Alternate Director Alternate Director
Management
Inge Zaamwani-Kamwi Managing Director Gareth Penny Stuart Brown Kennedy Hamutenya Director Director Director Chris Sivertsen Paulo Shipoke General Manager Group Business Services Manager
Percy McCallum Tjaart Willemse Group Human Resources Assistant General Manager: Manager Strategic Projects
Markus Lubbe Paul Sparks Group Financial Manager Assistant General Manager: Production
Hilifa Mbako Dee Sauls
Group External Affairs and Corporate Group Company Secretary Communications Manager
Lorna Mbwale Godfrey Kabozu Rob Smart Director Director Director 54 Namdeb Annual Review 2007 Namdeb Annual Review 2007 55
Glossary Statutory information and contact details
MCM Management Committee Meeting Company Secretary Company registration number ART Anti-retroviral treatment Libertha Kapere C1973 MUN Mineworkers Union of Namibia BSC Balanced Scorecard NASP Northern Area Sampling Plant DBMN De Beers Marine Namibia Business address and registered office Auditors NDTC Namibia Diamond Trading Company Head Office, Tenth Floor, Namdeb Centre Deloitte DTC Diamond Trading Company 10 Dr Frans Indongo Street, Windhoek NEMCOM Namdeb Executive Management Committee E/Bay Elizabeth Bay Bankers to the group EIA Environmental Impact Assessment NESRF Namdeb Employees Social Responsibility Postal address First National Bank Namibia Fund EMP Environmental Management PO Box 1906 Standard Bank of Namibia Programme NOSA National Occupational Safety Association Windhoek, Namibia Bank Windhoek Telephone: (+264) 61 204 3333 Nedbank Namibia GIS Geographic Information System NOSCAR National Occupational Safety Credited Award Facsimile: (+264) 61 204 3334 GPS Global Positioning System NPPC Namdeb Preferential Procurement GRI Global Reporting Initiative External Affairs and Committee GSD Group Services Division Corporate Communications NSF Namdeb Social Fund Telephone: (+264) 61 204 3333 ILO International Labour Organisation OPSCO Operations Management Committee Facsimile: (+264) 61 204 3367 KAP Key Area Performance Website: www.namdeb.com OTMC Oranjemund Town Management LoM Life of Mine Company LKI Lazare Kaplan International PTF Pre-treatment Facility LTIFR Lost-time Injury Frequency Rate SHE Safety Health and the Environment MA1 Mining Area No 1 VCT Voluntary Counselling and Testing MCF Mine Call Factor
years of
diamond production Notes
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