Namibia Stops Supply of Rough Diamonds to Leviev's Firm

Differences with De Beers are behind move, says source.

The state diamond company in the southwestern African country of Namibia will no longer supply uncut diamonds to Israeli businessman Lev Leviev's firm, the Namibian press reported last week.

Leviev's company, LLD, had a five-year contract to purchase rough diamonds from the Namibian government, but the country's minister of mines and energy, Isak Katali, announced that the contract would not be renewed due to what he said were Leviev's firm's failure to meet Namibia's requirements, said the local press.

The Namibia Diamond Trading Company (NDTC ), which is jointly owned by the national government and the De Beers diamond firm, which controls more than 40% of the world's rough diamonds, is no longer allocating diamonds to Leviev's company The newspaper The Nambian quoted a spokesman for the NDTC, Brian Eiseb, as saying: "Due to intense competition for rough diamonds, NDTC is not in a position to meet the needs of all companies wishing to receive rough diamond supply from NDTC." Eiseb said his firm ran a selection process last year based on "criteria aimed at the long-term viability and sustainability of the cutting and polishing industry in Namibia."

The paper also reported that the managing director of LLD in Namibia, Kombandayetu Kampwanga, "disputed the reasoning behind the rejection" of LLD, and said, he remained hopeful an agreement would still be reached between LLD and the Namibia Diamond Trading Company. The local paper said the halt to the supply of Namibian rough diamonds forced LLD to send 150 employees home on unpaid leave last week. Sources close to LLD confirmed this, but added that the impasse was the result of differences with De Beers. About a month ago, Kampwanga denied that there were plans to shut down LLD's operations in Namibia.

De Beers and Leviev have engaged in a struggle over the supply of rough diamonds around the world. When De Beers held more than an 80% world market share, Leviev challenged that monopoly through efforts to expand his own firm's share.

A diamond