Kenzoll Capital: Elizabeth Bay Mine Restart Namibia

• Kenzoll Capital and MSF Commercials are partnering to restart the Elizabeth Bay Mine in Namibia, despite a declining global diamond market.
• The mine, previously known as Sperrgebiet Diamond Mine, has a long history of operations and interruptions, most recently being out of production since 2018.
• The investment, expected to reach US$50 million after regulatory approvals, includes plans to explore for heavy mineral sands and critical metals in addition to diamonds.
• The restart aims to provide jobs and economic value to the Lüderitz area, which has historically depended on diamond mining.
• This initiative combines international capital with local expertise, signaling a potential diversification for Namibia's mining sector beyond diamonds.

The renewed activity at the Sperrgebiet Diamond Mine operations in Namibia, particularly with its pivot towards critical minerals exploration, could serve as a vital catalyst for economic revitalization and diversification within the region, attracting further Namibia mining sector investment and fostering local development.

Kenzoll Capital, a Dutch private equity and special situations investor, has recently partnered with MSF Commercials to initiate a restart of operations at the Sperrgebiet Diamond Mine, historically known as the Elizabeth Bay Mine, situated near Lüderitz in Namibia. This significant investment aims to revive an asset that has largely been out of production since September 2018, when Namdeb, its previous operator, placed it under care and maintenance, citing economic non-viability. The move comes despite a global diamond market experiencing a decline, with no recovery anticipated before 2027.

This is not the first attempt to bring the mine back to full capacity. The Elizabeth Bay Mine boasts a long operational history dating back to 1911, following the initial discovery of diamonds near Kolmanskop in 1908. Its operations have faced numerous interruptions over the decades, including during the First World War and the Great Depression. The mine was reopened in 1991 under Consolidated Diamond Mining before becoming part of Namdeb, a 50:50 diamond joint venture between the Namibian government and De Beers. A previous period of care and maintenance occurred in 2009 due to the global financial crisis, with Namdeb restarting operations in 2011 after a processing plant upgrade, initially projecting only four more years of production. However, technological advancements allowed the mine to exceed this projected lifespan.

By 2018, the Elizabeth Bay Mine again encountered severe challenges, including production difficulties at its processing plant and underperformance of its resources, leading Namdeb to seek a lower-cost operator capable of extending its life. Subsequently, Namdeb sold the mine and associated marine assets to Sperrgebiet Diamond Mining (SDM), a Namibian-owned consortium, for US$8.3 million, equivalent to approximately N$120 million at the time. The transaction was finalized in 2020, with SDM taking ownership and planning refurbishment and recommissioning. However, the mine did not achieve sustained production, and in 2023, SDM retrenched workers after diamond production and recovery rates fell short of expectations, compounded by financial difficulties. Kenzoll Capital's current investment therefore represents another critical effort to reactivate this strategic asset.

The planned restart of the Kenzoll Capital Elizabeth Bay Mine operations in Namibia, alongside new exploration initiatives, necessitates navigating a complex regulatory environment. The mine's extensive licenses cover a substantial 245,364 hectares within the Sperrgebiet region, encompassing estimated onshore diamond resources of 6.3 million carats and offshore resources totaling 4.2 million carats. A significant aspect of Kenzoll Capital's strategy involves not only restarting diamond production but also exploring for heavy mineral sands and critical metals within these licensed areas, minerals that have not been previously investigated.

Kenzoll Capital has already committed over US$10 million (approximately N$166 million) to Namibia. The full investment, projected to reach US$50 million (around N$828 million), is contingent upon securing the necessary regulatory approvals for both the mine restart and the progression of exploration and production activities for these new critical minerals. This dual focus on traditional diamond mining and the pursuit of new mineral resources underscores the importance of stringent adherence to Namibia's mining sector regulations and environmental compliance standards.

The Kenzoll Capital MSF Commercials investment in the Elizabeth Bay Mine carries significant implications for Namibia's mining sector and its broader economy. Kenzoll Capital CEO Corné Melissen emphasized the commitment to getting the mine productive again, highlighting its potential to provide jobs and economic value to an area that has historically relied heavily on diamonds for over a century. Melissen indicated that while diamonds would serve as the initial focus, the exploration and eventual production of critical minerals would follow, signaling a strategic diversification.

This investment arrives at a challenging period for Namibia's diamond industry, which has seen diamond export earnings decline sharply from N$1.5 billion in the fourth quarter of 2022 to N$1.7 billion in the first quarter of 2025. SDM director Conan Mlunga noted that the partnership effectively combines international capital with local expertise, offering the potential to generate value beyond traditional diamond extraction. The renewed activity at the Sperrgebiet Diamond Mine operations in Namibia, particularly with its pivot towards critical minerals exploration, could serve as a vital catalyst for economic revitalization and diversification within the region, attracting further Namibia mining sector investment and fostering local development.

This development signals renewed investment and potential M&A activity in Namibia's mining sector, requiring legal counsel to assess regulatory approvals for restarting operations and new critical mineral exploration, as well as conducting due diligence on the mine's complex operational history and past labour issues.

Source: Original reporting via The Namibian