Elizabeth Bay tries again
Elizabeth Bay has repeatedly outlived expectations, survived major investment and returned to production under new owners. Yet, more than three decades after its modern mine was commissioned, the question remains whether its diamonds can be extracted profitably.
That question has resurfaced after Dutch private equity and special situations investor Kenzoll Capital partnered with MSF Commercials to revive Sperrgebiet Diamond Mine (SDM), formerly known as Elizabeth Bay, south of Lüderitz.
Kenzoll has already committed more than U$10 million (N$165 million) to Namibia, with investment potentially reaching U$50 million (N$825 million) as the partners seek to restart diamond production and explore the mine’s licences for heavy mineral sands and critical metals.
SDM says its licences cover 245 364 hectares within Namibia’s restricted diamond mining area and contain 10.5 million carats of reported diamond resources, comprising 6.3 million carats onshore and 4.2 million carats offshore.
Resources not a guarantee of viability
But Elizabeth Bay’s history shows that substantial diamond resources do not necessarily translate into a commercially viable mine.
Diamond mining at Elizabeth Bay dates to 1911, three years after diamonds were discovered near Lüderitz. Its modern mining history began when Consolidated Diamond Mines, Namdeb’s predecessor, developed the deposit as an open-pit operation.
Commissioned in 1991, the mine was initially expected to operate for about 10 years. Its resource was estimated at approximately 38 million tonnes, grading 6.6 carats per 100 tonnes and containing more than 2.5 million carats. Annual production was projected at about 250 000 carats.
Instead, Elizabeth Bay continued operating for almost three decades, although keeping it running required substantial investment and repeated changes to its processing methods.
In the mid-2000s, Namdeb invested about N$445 million in a new liberation plant after the original system struggled to process all the remaining material efficiently. Designed to handle wet, cemented and clay-rich ore, as well as large diamond-bearing boulders, the plant was expected to
unlock about 1.9 million additional carats.
Nine lives
The investment extended the mine’s life, but economic pressures intensified during the global financial crisis. Namdeb placed Elizabeth Bay on care and maintenance in 2009 before redesigning the operation to reduce the cost of extracting the remaining diamonds.
The resulting Elizabeth Bay Optimisation Project enabled production to resume in November 2011. Although the redesigned operation was expected to have only a few years of life remaining, the mine continued producing beyond those expectations.
By 2017, it was producing about 200 000 carats a year and employing approximately 160 people. However, Namdeb was again questioning whether the remaining resource could be mined economically under its existing operating model.
In February 2018, Namdeb announced plans to seek a buyer, arguing that another operator with a different cost structure might be able to extract value from the deposit. Production stopped in September that year following difficulties involving the processing plant and resource performance.
The mine had produced more than four million carats between 1991 and 2018, far exceeding its original projected operating life.
A new owner, another restart
Namdeb selected a member of the Namibian-owned Lewcor Group as the preferred buyer in 2019. The transaction was completed in October 2020 for approximately N$120 million.
Renamed Sperrgebiet Diamond Mine, the operation came under Lewcor as majority shareholder, alongside MSF Commercials, David Sheehama and an employee trust.
The new owners planned to refurbish the mine and restart production in 2021, betting that a smaller operator with a different cost base could succeed where Namdeb had struggled.
The restart took longer than expected. Production eventually resumed in September 2022 after four years of inactivity, with initial output projected at about 240 000 carats a year, potentially rising to 360 000 carats.
The revival lasted only about six months.
Production stopped again in March 2023. Figures that later emerged during court proceedings showed that about 692 000 tonnes had been processed during the restart period, while diamond production was 83% below a target of 96 618 carats.
The shortfall added to the operation’s financial pressure, and NamPower disconnected its electricity supply in May 2023. Disputes involving shareholders and mining equipment subsequently ended up in court.
The episode showed that new ownership and a different cost structure had not resolved the mine’s underlying technical and economic challenges.
Beyond diamonds
Kenzoll’s arrival marks another attempt to revive the operation, this time with ambitions extending beyond diamonds.
Alongside the reported 10.5 million carats of diamond resources, the partners intend to investigate heavy mineral sands and critical metals across the 245 364-hectare licence area. Kenzoll says these commodities have not previously been explored there.
If commercially viable deposits are identified, they could diversify the operation’s revenue beyond diamonds. However, the scale of that opportunity remains to be established through exploration.
Kenzoll Capital chief executive Corné Melissen said diamonds would be the starting point for a broader investment.
“Elizabeth Bay has spent most of the past eight years out of action and we’re committed to getting the mine producing again, providing jobs and economic value to an area that has relied heavily on diamonds for over a century. This partnership is part of our long-term commitment and investment in Namibia, with diamonds as the starting point and critical minerals to follow,” Melissen said.
New partnerships, expertise
SDM director Conan Mlunga said the partnership would combine international capital with local expertise to restore the operation and develop opportunities beyond diamonds.
The latest revival comes as weaker global demand weighs on Namibia’s diamond industry. Diamond exports fell from N$5.1 billion in the fourth quarter of 2022 to N$1.7 billion in the first quarter of 2025, according to figures cited by the partners.
Several details of the proposed restart remain undisclosed, including a firm production date, expected annual output, operating costs, projected employment and how much of the potential U$50 million (N$825 million) investment would be allocated specifically to restarting diamond production.
These details will be central to assessing whether the latest attempt can succeed where previous efforts have struggled.
Elizabeth Bay has undergone major processing upgrades, operational redesigns, a change of ownership and several production restarts. Yet it has repeatedly failed to sustain operations.
Kenzoll and its partners are betting that fresh capital and a broader minerals strategy can change that. The immediate test is whether they can turn the mine’s reported resources into consistent, profitable production.
