giving the diamonds back their shine

http://www.theafricareport.com/index.php/news-analysis/giving-the-diamonds-back-their-shine-50181552.html

By [B]Louise Redvers in Luanda[/B]

[B]A new mining code should bring more investment as state-owned and private mining companies diversify into iron, manganese and gold production.[/B]

© Reuters
A soon-to-be-launched new mining law aims to regularise Angola's non-oil extractive industry and attract more investment into the country's second most important sector.

Angola is among the [LINK=/index.php/201108095168920/blogs/zimbabwe-now-top-world-diamond-producer-5168920.html]world's top diamond exporters[/LINK], but the global financial crisis has led to a steep plunge in prices. Several large companies, including BHP Billiton, abandoned their Angolan projects while others mothballed mines.

The new legislation, which has been some years in the making, could convince international mining companies that have previously stayed away due to concerns over corruption and opaque contracts, to take another look at Angola.

The code, which runs to nearly 80 pages, sets out clear guidelines for investment and environmental and social responsibilities.

The state-owned diamond company Empresa Nacional de Diamantes de Angola (Endiama), which is the exclusive concessionaire of diamond rights, is talking up 2012 as the year for the gem industry to re-launch, and 15 companies are currently prospecting.

According to Endiama's 2010 figures, Angola produced 1.2m carats of alluvial diamonds and 6.9m carats of kimberlite diamonds. This brought in gross receipts of just less than $1bn. Companies plan to increase production over the next three years to around 13m carats per year.

With the per-carat price estimated in the Angolan budget at just under $100, the hope is for big profits. The profits and new laws, however, will come too late for South Africa's Trans Hex.

Its high profile entry into the [LINK=/index.php/2009112388/frontline/country-profile-angola-88.html]Angolan market[/LINK] in 2006 ended in a fizzle in September following a failure to reach agreement about funding to restart the mothballed Fucauma and Luarica projects in Lunda Norte.

The Catoca mine in Lunda Sul continues to perform strongly. Operated by Sociedade Mineira de Catoca, it is 32.8 per cent owned by Endiama, 32.8 per cent by Russian company Alrosa, 16.4 per cent by Brazil's Odebrecht and 18 per cent by China Sonangol, which bought the share that had been owned by Israeli tycoon Lev Leviev in mid-2011.

Other players in the Angolan diamond sector include Lonhro Mining, which is reporting excellent alluvial recoveries from its Lulo Project, and global giant De Beers.

The legislature is also drawing up new regulations to allow companies to sell locally-mined and polished diamonds within the country. Angola Polishing Diamonds (APD) is planning to open a jewellery store in Luanda, the first of its kind in the country.

APD, which was created six years ago and employs 600 people, sells its diamonds to the Endiama-Israeli-Antwerp selling house Ascorp.

The majority of Angola's diamond reserves are located in the north and east, in the provinces of Lunda Norte and Lunda Sul, on the border with the [LINK=/index.php/201011113278615/central/country-profile-democratic-republic-of-congo-3278615.html]Democratic Republic of Congo (DRC)[/LINK] and [LINK=/index.php/20101111626/south/country-profile-zambia-626.html]Zambia[/LINK].

But despite the riches themines generate, the people living in those areas are amongst the poorest in Angola, with low levels of social development and little formal employment. Congolese workers cross over the border to work as artisanalminers or garimpeiros.

This has created tensions in the area and both Angolan and Congolese garimpeiros complain of physical and sexual abuse carried out by private and state security forces.

Human rights campaigners are calling for an end to the militarised occupation of the diamond fields and for more of the money generated there to flow back into the local communities.

Beyond diamonds, [LINK=/index.php/news-analysis/development-leads-to-demands-50181460.html]Angola is also rich in other minerals and metals[/LINK] which have until now been largely unexploited because of the war, its legacy of land mines and the lack of roads, electricity and other basic infrastructure.

According to Diamantino Pedro de Azevedo, president of the state-owned iron company Empresa Nacional de Ferro de Angola (Ferrangol), the company will begin to produce iron,manganese and gold for export to Asia and Europe in 2013.

Ferrangol and partners are investing some $400m in an iron exploration project in Huila. Locals expect the investment to create more than 3,000 jobs in the land locked and largely rural province in the southwest.

Other mines are located in Malange and Kwanza Norte provinces. Meanwhile local company Lualica has been conducting gold exploration activities in the northern enclave of Cabinda.