Angola plans to start Operating Diamond cutting factory this year, says Mines minister

Angola plans to start operating its diamond cutting factory in March this year  to make use of the entire diamond value chain, local media has reported-citing a Government official.

The Angolan Minister for Geology and Mining, Francisco Queiroz told local media that the new factory was part of the National Development Programme and is intended to make use of the entire diamond value chain from prospecting and mining to cutting and jewelry.

In Angola we are already at the level of cutting and we have some experience in terms of jewelry, but this is limited,” the minister said, noting that at the factory there was a small unit to produce jewelry including rings, earrings and necklaces.

Queiroz stated further that this experimental business had seen good results as the items produced there had been well-accepted by the market.  The diamond mining sector which accounts for between 3 and 5 percent of Angola’s gross domestic product (GDP) in 2013 provided tax revenues of 9.5 billion kwanzas (US$97 million).

The Catoca diamond mine in the province of Lunda Sul, lying 30 kilometres from the capital town of Saurimo, is considered the world’s fourth biggest diamond mine in terms of size and diamonds are mined from a large kimberlite pipe, a vertical tube of igneous rock.

Diamonds are an important source of revenue to Angola, and are only second to petroleum. Petroleum accounted for more than 90 percent of exports by value estimated at $7.56 billion while diamonds followed at $638 million or 7.6 percent of the value of exports in 2002.

Officials reported diamond production in 2003 was 5 million carats, up from 5.022 million carats in 2002. However, that total does not include illegal production. Sociedade Miniera de Catoca Ltd (SMC) is Angola’s leading producer of diamonds, with an annual production of around 2.8 million carats from its Catoca kimberlite pipe.

Reserves in the Catoca kimberlite were estimated to be at 189.3 million carats.

SMC is a joint venture of Empressa Nacional de Diamantes de Angola (Endiama), the state-owned diamond mining company and the Joint Stock Company Almazy Rossii-Sakha (Russia), Odebrecht Mining Services Inc. (Brazil), and the Leviev Group (Israel).

Large iron ore deposits have been discovered in many areas. The deposits at Kassinga, with an estimated reserve of one billion tons of high-grade hematite iron ore, annually yielded millions of tons of ore exports before the civil war halted mining in 1975.

Ferrangol, the state iron ore mining company, produced a slight quantity of ore in 1988; it has shown no output since. The mines in Lunda Norte and Lunda Sul provinces, previously controlled by UNITA rebel forces, were opened to foreign companies for exploration and development in 1996, and an Endiama-De Beers venture announced the discovery of 17 new kimberlites there in 2000.

These areas contributed about $400 million to the annual $1.1 billion value of diamond production. SDM, an Endiama-Australian-Odebrecht venture formed in 1995 to mine alluvial diamonds in the Cuango River Valley, near Luzamba, produced 210,000 carats of high-quality diamonds in 2000 and 185,000 carats in 1999.

Other such ventures saw their operations frequently suspended because of security problems. A feasibility study of the proposed Camafuca kimberlite estimated 23.24 million carats of diamonds valued at $109 per carat.

Generally, Angola is a potentially rich country of abundant natural resources, a surplus-producing agricultural sector, and a sizable manufacturing potential.

This promise has remained unfulfilled due to the effects of the war for independence and a 27-year-long civil war that only ended in April 2002 when the army signed a peace agreement with the UNITA rebels.

With the end of the war Angola has begun to score astounding economic growth rates. In 2004 Angola’s GDP grew by 12.2% and in 2005 the growth rate was 19.1 percent and this growth is expected to continue with heavy flow of foreign direct investments into the oil and mining sectors.

Additionally, petroleum production and diamond mining have led Angola’s industrial sector. Economists estimated that Angola’s alluvial reserves of diamonds totalled between 40 and 130 million carats.  These were untapped diamond reserves in volcanic pipes called kimberlites. Angola’s six known kimberlite pipes, among the ten largest on earth, held an estimated 180 million carats worth several billion dollars. Diamond production (official and unofficial) was estimated to be worth $1 billion per year in 2002.

The petroleum sector benefited from major investments, totalling over $2 billion since 1987, and from a relative immunity from the civil war.

Producing around 980,000 barrels a day in 2004, up from 950,000 barrels a day in 2002, Angola was the second-largest oil producer in sub-Saharan Africa.

Crude oil accounted for 90% of total exports, more than 80% of government revenues, and 45% of the country’s GDP. Known recoverable reserves were estimated to total several billion barrels, but Angola was not a member of OPEC at the time.

In 2000, Angola was one of three countries to receive the largest amount of global and US foreign investment to the sub-Saharan region (the other two were Nigeria and South Africa). Inflation, always a problem, ran at approximately 44 percent in 2004 down from a high of 150 percent in 2001.

IMF was critical of the government’s economic policy on a number of aspects, such as persistent opacity and uncertainty in the government’s accounts, lack of progress on structural reforms, failure to implement policies to deal with poverty systematically, and corruption in the management of oil revenues.

The IMF recommended a slate of reforms, such as increasing foreign exchange reserves and encouraging a more transparent accounting of government spending.

In 2005, IMF gave some credit to the government’s handling of the economy, particularly the sustained progress in lowering inflation and improved transparency in government financial accounting.

The country is also rich in nickel, platinum-group metals, magnetite, copper, phosphates, gypsum, uranium, gold, asphalt, and feldspar though certain areas have been off-limits to exploration during the civil war. 


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