New Era for Angola's Diamonds

Angola is looking to the future. At the moment it's stockpiling of a million carats of diamonds that nobody wants.

But this week it officially opened a new mine that could double its diamond revenue - and boost its ambition to become the world's second biggest producer by the end of the decade.

The discovery of the Luele kimberlite pipe in 2013 has been hailed as the biggest discovery in the last 60 years.

It's forecast to yield 628m carats of diamonds over a 60-year life of mine.

That's an average of over 10m carats a year, which would put it on a par with the Orapa, in Botswana, the third biggest mine in the world by carat production.

Luele is just 25km from Catoca, currently the biggest diamond mine in Angola by far, and the fourth biggest in the world.

But Luele (formerly known as Luaxe) is likely to eclipse it, with higher production levels, higher quality kimberlite, and higher per-carat average prices.

It is a game changer for a nation that was blighted by an on-off civil war from 1975 to 2002.

Angolas still battles widespread illegal diamond mining and trafficking, and it has yet to  explore 60 per cent of its diamond-rich territories. Almost half its citizens live in extreme poverty, inflation is up and the value of its local currency is down.

The global downturn has badly hit Angola's diamond sales. Jose Ganga Junior, chairman of the state diamond company Endiama, put it bluntly when explained why he was waiting for prices to rise before he considered selling his stockpile.

"In practice Angola has no buyers of this resource," he told the Angolan news agency Angop in September.

Angola's rough exports last year were just 8.75m carats, well down on its original forecast of 13.8m.

This year's foreign sales are likely to be even lower, with first half sales at just 2.93m carats.

But zoom out. Angola now has a mine that's even bigger than Catoca.

At the inauguration of Luele, Diamantino Azevedo, the minister of mineral resources, oil and gas, spoke of how Luele would contribute to a significant increase in diamond production.

And how newly-opened factories would help achieve a target of cutting 20 per cent of locally-produced diamonds in Angola

He also referenced the return of De Beers and Rio Tinto to Angola in search not only for diamonds, but for other mineral resources.

The cost of the new mine, majority-owned by the Catoca Mining Company, so far has been almost $640m.

Since trial phases began at Luele in 2017, over 5m carats have been recovered. It will initially produce just over 1m carats a year, with a gross revenue of $60m, but that's just the start.

It will still be producing diamonds long after we have all left this earth. And long after the current post-Covid dip has been forgotten.

Have a fabulous weekend.