Monday, September 26, 2011

Angola's 'Sparkling Industry': Diamonds

Diamonds are Angola's second-largest export earner after oil.  Angola is the fourth-largest diamond producer in the world and is reputedly in the top three in terms of gemstone quality. Endiama (Angola’s state diamond holding company Empresa Nacional de Diamante de Angola EPmanages the Angolan state’s shareholdings in the diamond sector.

The majority of diamond mining in Angola is on an industrial basis. Angola produced a total of 8.55 million carats in 2010 and had estimated gem sales worth $956 million. Artisan mining accounted for around 6 per cent of Angolan sales that year. 

By far the largest mine is Catoca, which aims to be the world’s third largest by 2020. Catoca is owned by Endiama 32.8%, Alrosa SA 32.8%, Daumonty Finance 18% and Odebrecht Mining Services 16.4%. 

Angola joined the Kimberley Process Certification scheme in 2000. The scheme was established to prevent ‘blood diamonds’ from being sold through the rough diamond market and to assure customers that when they bought a diamond they were not financing wars or human rights abuses. The process has achieved some success. 

As part of further efforts to improve conditions for artisan diamond miners, the government has developed a plan to offer support and legal protection. Some Angolan mines are nearing commercial exhaustion but there are still diamonds to be had. It is not profitable for industrial companies to exploit them, so there is a niche for small mining operations, said Endiama spokesman António José Freitas.

The government’s aim is to increase local incomes, cut unemployment and combat poverty, so it is encouraging the formation of small co-operatives with up to five members to work in one-hectare claim areas.

The right to mine is restricted to Angolans over 18 years of age who have lived in the mining area for at least ten years. No foreign citizens are allowed in claim areas and it is forbidden to transfer a licence. Conditions include obligations to exploit all existing diamonds in the claim area and to sell them to Sodiam. The use of industrial equipment is banned and tools limited to basics such as hoes, machetes, shovels, picks and buckets. (Sonangol Universo Magazine, 2011)

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