Diamonds are pumping more money into Namibia's state coffers than in recent years, AllAfrica.com reports, quoting an analysis by Capricorn Investment Holdings (CIH).

Royalties from diamond mining have generated $28.6 million for the state since the start of the year, and these royalties rose by $5.8 million from the first to the second quarter.

According to CIH, diamond sales are also on the rebound. There are a total of 10 diamond sales scheduled for 2011. Four have already been held, at which a total 560,000 carats of diamonds fetched over $317 million. CIH projects that total diamond sales for 2011 will reach some 1.4 million carats with a total value of over $758 million.

Namibia's diamond production, however, was down. This year to date, a total of 603,000 carats of diamonds have been mined, and from April-June only 208,000 carats were mined – less than half of total production in Q2 2010. In total, Namibia produced 1.69 million carats of diamonds valued at $744 million in 2010.

Moreover, the country's diamond industry is approaching peak production, requiring a capital investment of some $300 million to update existing infrastructure.