Saving Diamond Towns

Saving the Diamond Towns

Namibia has its fair share of ghost towns that have come about largely because a mineral deposit or precious stones has gone into terminal decline. The old diamond mines of southern Namibia of Kolmannskoop and Pomona declined purely as a result of the end of diamond deposits. It is said that at the height of the Klondike gold rush in Canada in the 1860’s Dawson (current population 1130) was the fourth largest town in North America. The decline and disappearance of some towns are not always a result of the end of a mineral deposit. The ancient town of Petra in the Jordanian dessert declined as a center it is believed because of  shifts in the spice trade. When the economic foundations of a town disappear, so does the town. But the people who live there hang on hoping that their homes will not suffer the same fate as those of who owned what was once precious property in Kolmannskoop.

Some mining towns do not go into terminal decline such as Johannesburg which has remained a thriving metropolis even as the great gold deposits of the rand mines become deeper and smaller. The continuing wealth of Johannesburg  stems from the fact that some 2 billion ounces, or half the world’s total production of gold  came from the Rand fields. When a mining town is able to continue for 135 years like Johannesburg then other sources of economic activity can replace the mines and prosperity can continue but it takes an extraordinary deposit like the Rand gold fields to sustain these  towns for the length of time needed for transformation.  Johannesburg remains a magnet for economic migrants, globalization has diminished its African trade role as a center for the purchases of manufactured products. In the 1980’s and 1990’s African merchants and traders would flood into Joburg but now the traders fly directly to Ghangzou in southern China and are able to completely undercut anything made or traded directly through South Africa.   Even Joburg will struggle to redefine itself in the world of globalization.

Governments, in fruitless attempts to placate the citizens of these dying towns, often try to help avoid economic reality by financing unrealistic economic diversification strategies through subsidy. In the Botswana town of Selebi Pikwe, the third largest town in the country, the government with the help of the EU has poured countless billions of rand  into resuscitating and diversifying the town away from nickel/copper mining. All the efforts failed and as grades of nickel and copper fell the BCL mine has been closed and the town now awaits what would appear to be its inevitable fate.

The subsidies that were provided to Selebi Pikwe failed to attract an alternative economic basis. The once thriving diamond town of Kimberly in SA has used ‘the Big Hole’ as a tourist attraction and has turned its infamous  history to its economic advantage in much the same way as tours of the ghost towns of southern Namibia attract numerous tourists. But they are no substitute for diamonds though tourism can be.

Swakopmund, which was very much in economic decline following the departure of the Germans and the end of its economic role as the capital of German south West Africa  also used tourism and retirement homes in a relatively pleasant environment as a basis for economic diversification.

The small town of Oranjemund in southern Namibia, at the mouth of the Orange River on the border with South Africa will also face this problem once the mining of diamonds from the  Orange river comes to an end, probably somewhere around 2050. The lesson form the experience of Selebi Pikwe are clear enough, subsidies to build factory shells that are commercially unsustainable won’t work and only end up as kick-backs and bribes to those officials building these rusting white elephants. The possibility of survival rests on connectivity of the town with the outside world and finding a genuine alternative commercial base for the town which is not one reliant on government hand-outs.

So what is the best chance for success?  The problem is that both Oranjemund, like the De Deers diamond town of Orapa in Botswana,  are closed to outsiders and you  require a permit to enter. This has been a policy imposed by De Beers and has been in existence in Namibia since German colonialism and is known as ‘Sperrgebiet’ ( German for ‘prohibited area’). The policy exists to protect the diamond deposits from possible theft. Yet the key to the long term survival of the town  is the opposite of Sperrgebiet- it is openness to the outside world.  In theory Oranjemund can follow the tourism path to diversification given its fabulous location. The key is to invest in the sort of infrastructure that links the border town to South Africa and the outside world. Selebi Pikwe in Botswana also flirted with tourism but after the engineers who built its BCL smoke stack down wind of this small town, tourism has always looked like a remote diversification strategy in a place plagued with acid rain and foul smelling air.

In the end most diversification strategies for one industry towns generally fail and mining towns normally become ghost towns once the minerals are exhausted.  The diversification strategies  are most likely to fail when they focus on the town itself rather than how to focus and change the economic base of the town on the outside world and how this can be done in a  commercially sustainable way.

These are the views of Professor Roman Grynberg and not necessarily those of UNAM where he is employed.