There has rarely been much doubt that diamonds remain at Elizabeth Bay, but for more than three decades the harder question has been whether they can be recovered profitably from a mine that has repeatedly required fresh investment, redesigned processing methods and new owners to keep it alive.
That question has returned with Dutch private equity and special situations investor Kenzoll Capital partnering with MSF Commercials to revive Sperrgebiet Diamond Mine (SDM), formerly known as Elizabeth Bay, south of Lüderitz.
Kenzoll has already committed more than US$10 million to Namibia and says investment could eventually reach US$50 million as the partners work to restore diamond production and explore SDM’s licences for heavy mineral sands and critical metals.
The attraction is considerable. 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 another 4.2 million carats offshore.
Elizabeth Bay’s history, however, shows that having diamonds in the ground has never guaranteed an easy mining operation.
Diamond mining at Elizabeth Bay dates to 1911, only a few years after diamonds were discovered near Lüderitz in 1908, but its modern mining history began when Consolidated Diamond Mines, Namdeb’s predecessor, developed the deposit as an open-pit operation.
The modern mine was commissioned in 1991 and initially expected to operate for about 10 years. At the time, its resource was estimated at approximately 38 million tonnes grading 6.6 carats per 100 tonnes and containing more than 2.5 million carats, with production planned at around 250,000 carats annually.
Instead of disappearing around the turn of the century, Elizabeth Bay survived for almost another two decades, although keeping it operating increasingly required substantial investment and changes to the way its ore was processed.
One of the biggest interventions came in the mid-2000s when Namdeb invested about N$445 million in a new liberation plant because the original processing system could not efficiently treat all the remaining material. The new facility was designed to handle wet, cemented and clay-rich ore as well as large diamond-bearing boulders, with Namdeb expecting it to unlock approximately 1.9 million additional carats.
The investment extended the mine’s life, but economic pressures persisted and intensified during the global financial crisis. Namdeb placed Elizabeth Bay on care and maintenance in 2009 before undertaking another technical and economic redesign aimed at finding a cheaper way of mining the remaining resource.
That work produced the Elizabeth Bay Optimisation Project and allowed production to resume in November 2011. Although the redesigned operation was expected to have only a few more years of life, Elizabeth Bay again survived longer than anticipated.
By 2017, the mine was still producing around 200,000 carats annually and employing approximately 160 people, but Namdeb was again confronting the question of whether the remaining diamonds could be recovered economically within its operating structure.
Namdeb announced in February 2018 that it would seek a buyer, arguing that another operator with a different cost structure could potentially extract value from the remaining resource. Production eventually stopped in September that year after difficulties involving both the processing plant and resource performance.
By then, Elizabeth Bay had already outlived the assumptions under which the modern mine had been developed. An operation initially expected to last roughly 10 years had survived for almost three decades and produced more than four million carats between 1991 and 2018.
The next attempt to extend its life came through new ownership.
Namdeb selected a member of the Namibian-owned Lewcor Group as the buyer in 2019, with the transaction eventually completed in October 2020 for approximately N$120 million. The operation was renamed Sperrgebiet Diamond Mine, with Lewcor becoming the majority shareholder alongside MSF Commercials, David Sheehama and an employee trust.
The new owners initially planned to refurbish the operation and restart production in 2021, believing a smaller operator with a different cost base could succeed where Namdeb had struggled.
The restart took longer than expected, but production eventually resumed in September 2022 after four years of inactivity. Plans at the time envisaged initial production of around 240,000 carats annually, potentially increasing to about 360,000 carats.
The revival lasted only about six months.
Production stopped again in March 2023, with figures that subsequently emerged during court proceedings showing that approximately 692,000 tonnes had been processed during the restart period while diamond production came in 83% below a target of 96,618 carats.
The poor performance brought renewed financial pressure, and NamPower disconnected electricity supply to the operation in May 2023. Disputes involving shareholders and mining equipment subsequently ended up in court.
That experience demonstrated that changing ownership and adopting a different cost structure had not automatically solved Elizabeth Bay’s underlying technical and economic challenges.
Kenzoll’s arrival therefore marks another attempt to solve a problem that has followed the operation through several generations of mine planning, although this time the strategy extends beyond diamonds.
Alongside the 10.5 million carats of reported diamond resources, the partners intend to investigate heavy mineral sands and critical metals across the 245,364-hectare licence area, commodities Kenzoll says have not previously been explored there.
That could eventually give Elizabeth Bay something its earlier operators did not have: a wider mineral business capable of generating value beyond its traditional diamond operation.
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.
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 attempt comes at a difficult time for Namibia’s diamond industry as weaker global demand weighs on export earnings. Diamond exports fell from N$5.1 billion in the fourth quarter of 2022 to N$1.7 billion during the first quarter of 2025, according to figures cited by the partners.
Important details about the new restart plan also remain undisclosed, including a firm production date, expected annual output, operating costs, employment numbers and how much of the potential US$50 million investment will be required specifically to restart the diamond operation.
Those figures will matter because Elizabeth Bay has already been redesigned, recapitalised, restarted and transferred to owners with a different cost structure, yet it has repeatedly struggled to remain in production.
Kenzoll and its partners are now attempting another reinvention, armed with fresh capital, 10.5 million carats of reported resources and ambitions extending into critical minerals.
