De Beers has lost another lucrative source of African diamonds. This time to a new contender linked to mercenary group Executive Outcomes. Chris Gordon reports
BRANCH Energy Angola, the company linked to South African mercenary operation Executive Outcomes, has received a new mining concession from the Angolan government, making it one of Angola’s most significant – and valuable – mining operations.
The concession – coming after a few months of strained relations with the Angolan government last year – threatens to knock yet another jewel out of the De Beers’s diamond crown. Angola is one of the world’s top producers of high-quality gems, with diamond sales worth an estimated $1-billion a year.
Branch Energy Angola is a subsidiary of DiamondWorks Angola, in turn a subsidiary of a Canadian company listed on the Vancouver Stock Exchange.
By November, Branch Energy’s operation in Angola had reached a low point. The company had to decide whether to expand or pull out, only months after their concession was formally agreed by the Angolan government.
The arrest of 21 of Branch Energy’s operatives in their Luarica concession, before access had been granted last September, was followed by reputed difficulties with the government over the formation of DiamondWorks.
Branch Energy’s response was to offer the government an upgraded operation, using the capital from the DiamondWorks flotation.
The company put in additional strategic infrastructure, and reorganised its management. It bought an IIuyshin 76 and installed a powerful telecommunications system in Luanda linked to the Johannesburg telephone exchange.
Saurimo, in the diamond-rich Lunda Norte province, will become a customs post so mining equipment can be flown in direct from South Africa.
The objective, according to Branch Energy, is to provide logistical support for companies wanting to invest in Angola, as well as supporting Branch Energy’s own expanded operations.
This strategic approach extends to mining, which the company describes as “security- led”. Teleservices, the Executive Outcomes- owned Angolan security firm, is sent in first to secure the mining areas, before mining operations commence.
Branch Energy’s own diamond security in Luo is headed by JC Erasmus. Like many of Branch Energy’s South African staff, he is a former member of apartheid South Africa’s notorious Civil Co-operation Bureau death squad.
Erasmus is also a shareholder in DiamondWorks. Asked about Branch Energy’s relations with Executive Outcomes, he described them as “good friends”.
The diamonds from Luo are valued at $400/carat by DiamondWorks, with diamonds from the Luarica concession valued at $600/carat. They expect to produce 10 000 carats a month.
Branch Energy’s latest acquisition is the vast Alta Kwanza concession – 18 000km2 region in Bie Province, Unita’s heartland. Bie Province is thought to have been mined by the Angolan opposition group since the early 1980s. Relations with Unita are said to be amicable.
Luo is Branch Energy’s first operational diamond mine, although their earliest diamond mining concession was the 1995 contract for the Koidu kimberlite pipe in Sierra Leone. The contract was awarded over the heads of Sunshine Mining and Diamond Fields Resources, then headed by Jean- Raymond Boulle, whose America Mineral Fields appears to be emerging as the victor in the mineral rush into Zaire. Boulle has forged close relations with the rebels of Laurent Kabila.
At the time this contract was signed, links between Branch Energy’s mining operations and the South African firm Executive Outcomes’s holding company, Strategic Resources, became public, with press reports in London disclosing that Executive Outcomes held a 40% share in Branch Energy’s Sierra Leone operation. Branch Energy has always denied that any corporate links exist between itself and Executive Outcomes.
Branch Energy has been linked to Executive Outcomes in Angola and, most recently, in Papua New Guinea. In each case, the intervention has reportedly been by contact at governmental levels and aimed at wiping out rebel movements who occupy rich mining areas.
In the two African cases, a mining concession for Branch Energy has followed. The Papua New Guinea operation failed. Executive Outcomes underrated the response to this operation.
One Luanda-based diplomat, asked why there should be any concern about the linkages, said investors will be happy to know their stake is well-protected.