Elizabeth Bay Mine’s future has been cast into deeper turmoil following a High Court order placing its operator, Sperrgebiet Diamond Mining (Pty) Ltd, into provisional winding-up.
The High Court ordered Sperrgebiet Diamond Mining (Pty) Ltd into provisional winding-up after Lewcor Holdings (Pty) Ltd approached the court, arguing that the company is financially distressed and at risk of dissipating assets.
The order requires that a rule nisi be served on all stakeholders, calling on them to appear on a date still to be set to show cause why the provisional order should not be made final.
It must also be published in The Namibian, Republikein and the Government Gazette.
The defendants cited in the matter include RZ Murowa Holdings, MSF Commercials Investments CC, David Sheehama, Abraham Carel Grobler N.O. and the Bank of Namibia. Lewcor, which holds a 17 per cent stake in the company, told the court that provisional liquidation was necessary to protect creditors and to allow for a detailed examination of the company’s affairs.
Lewcor has also asked the court, in the alternative, to compel the transfer of its 17 per cent shareholding to RZ Murowa or to the other shareholders, subject to a valuation of the business as at December 2023. Any party opposing the final liquidation risks liability for costs, including the costs of one instructing and two instructed counsel.
The court action has thrust into the spotlight a company whose story stretches back to the early history of diamond mining in Namibia.
The ground now operated under Sperrgebiet Diamond Mining lies within the broader landscape where diamonds were first discovered in 1908, leading to the establishment of Kolmanskop, the country’s first significant diamond settlement.
Elizabeth Bay, a short distance south of Lüderitz, has been part of this history since 1911, when it began producing diamonds.
Its geology is as rich as its heritage. The licence hosts both deflation and aeolian deposits. The Elizabeth Bay deposit itself consists of older red beds, overlain by brown beds, which in turn are covered by unconsolidated grey beds formed by wind-blown grit. The red and brown beds are complex mixtures of sheetwash and aeolian sands, while the grey beds represent successive coarse lag surfaces, each layer building on the last to form deposits up to half a metre thick.
Kolmanskop and Grillental, nearby historic workings, consist primarily of thin deflation deposits with limited sheetwash influence.
These deposits yielded consistent production during the Namdeb era. Between 1998 and 2018, Elizabeth Bay produced between 100,000 and 350,000 carats per year, with average stone sizes ranging from 0.12 to 0.20 carats. However, by 2018, the mine’s profitability had eroded due to declining grades and rising costs, and Namdeb placed it on care and maintenance. In 2019, Namdeb announced its intent to sell the mine to an operator capable of maintaining it economically.
After an independent selection process, Sperrgebiet Diamond Mining was chosen as the buyer. The sale price of US$8.3 million, then roughly N$120 million, was made public, and the transaction was finalised in October 2020.
Namdeb completed the handover on 2 October 2020, with a formal ceremony held on 14 October.
Sperrgebiet Diamond Mining was formed by Lewcor Holdings, which initially held 75 per cent of the company, alongside MSF Commercials and David Sheehama.
A further 5% was placed in an employee trust. The acquisition required immediate investment in environmental clean-up, plant refurbishment and the recommissioning of the central processing facility.
The company planned to bring the plant back into production during the first quarter of 2021 and aimed to resume full-capacity mining in the second quarter of that year.
In June 2022, the company announced that Global Emerging Markets Group, through one of its resource subsidiaries, had acquired a 78 per cent majority stake, with Namibian shareholders retaining 22 per cent, including a 2 per cent employee trust.
GEM, which holds mining and energy assets across southern Africa and has links to RioZim and the RZM Murowa diamond mine in Zimbabwe, said the investment was part of a broader strategy to expand its mining and green-energy footprint.
The Namibia Competition Commission and the Minister of Mines and Energy approved the transaction. At the time, the company expected to restart production at historic Namdeb levels in late 2022 and planned to double output by mid-2023 by installing an infield pre-treatment plant. It is projected that employment will rise to 180 workers by the end of 2022.
Sperrgebiet Diamond Mining positioned the Elizabeth Bay project as an operation with licences valid until 2035 or 2038, depending on the specific blocks.
The mine was also permitted for environmental compliance and promoted as having a 10-year life with scope for expansion into renewable energy projects. Management often emphasised the potential for downstream value addition, collaboration with local jewellers, and support for tourism activities linked to historic sites such as Kolmanskop.
Despite these plans, production under the new ownership structure did not stabilise. Output failed to reach anticipated levels, equipment failures repeatedly disrupted mining cycles, resulting in inconsistent gravel grades, and the high cost of maintaining contractor-driven operations.
These operational pressures deepened tensions among shareholders. Lewcor, which was both a mining contractor and an equity partner, clashed with the majority shareholders over machinery movements, financial contributions, and the valuation of shareholding interests. Disputes escalated into a sequence of urgent applications, interdicts and appeals throughout 2023 and 2024.
By mid-2023, RZ Murowa Holdings had also entered the shareholding structure as a controlling investor, aiming to replicate its compact alluvial-mining model across the Elizabeth Bay licences.
The amount paid for this stake has never been publicly disclosed. RZ Murowa hoped to bring the plant back to sustained production, using treated ore, mobile screening systems, and a tighter operational footprint to maintain cash flow even at reduced grades. However, the operation failed to achieve consistent throughput, worsening the financial strain that eventually spilt into the courts.
The High Court’s provisional liquidation order now freezes the company’s assets and places its affairs under judicial oversight. When the matter returns to court, judges will determine whether Sperrgebiet Diamond Mining can be restructured or whether it must be put into final liquidation.
Until then, the mine’s future remains uncertain, marking one of the most dramatic turns yet in a century-old chapter of diamond mining on Namibia’s southwest coast.
