July 22 (Bloomberg) -- Namdeb Diamond Corp. a joint venture between De Beers and the Namibian government, declared a dispute with the Mineworkers Union of Namibia after wage talks broke down, a union official said.

Workers at the mine are demanding a 16.5 percent salary increase, while the company has told the union it is only prepared to offer 9 percent, George Matali, chairman of the labor union's Oranjemund branch, said in a telephone interview today. Ophelia Netha, Namdeb's senior human resources manager, wasn't available for comment when her office was called today for comment.

``There was no need for a dispute, but the company officials walked out of negotiations,'' Matali said. ``The 9 percent offered by the company is below the current inflation rate.''

De Beers is 45 percent owned by Anglo American Plc, the world's second-biggest mining company, 40 percent by the Oppenheimer family and 15 percent by Botswana's government. Namdeb announced earlier this month it will spend 750 million Namibian dollars ($100 million) to explore for new diamond resources in the country.

Matali said company representatives and union officials are expected to meet again on July 25. The matter will be referred to the country's labor commissioner if no agreement is reached, he said.

Annual inflation in Namibia accelerated to 10.3 percent in June, from 9.7 percent in May, as food and fuel costs increased, according to Namibia's Central Bureau of Statistics.

To contact the reporter on this story: Chamwe Kaira in Windhoek via Johannesburg at pmrichardson@bloomberg.net.

Last Updated: July 22, 2008 11:05 EDT