The world’s largest diamond-miner, De Beers, and Angola diamond-mining parastatal Empresa de Diamantes de Angola (Endiama) on Friday concluded a new agreement, four years after a contractual dispute saw the two parties’ relationship break down.
The agreement became effective on Friday, following the approval of the final text by the Angolan government’s Council of Ministers. The agreement, which will lead to a joint venture 51% held by Endiama and 49% by De Beers, encompasses exploration, mining and marketing, once diamonds are discovered and mined.
The joint venture will explore for kimberlites or diamond ore in the Lunda Norte province of Angola. The province is situated in the north-eastern corner of Angola and borders the Democratic Republic of Congo.
In 2004, arbitration proceedings between Endiama and De Beers resulted in a settlement of the dispute between the two groups, which opened the way for Friday’s agreement.
De Beers, 45% held by Anglo American, will join BHP Billiton, Russian diamond-miner Almazy Rossi-Sakha (Alrosa) and junior Australian miners that are active in the country, De Beers spokesperson Tom Tweedy said.
Another company seeking diamonds in Angola is London-listed junior miner Adastra Minerals and South African miner Trans Hex, which has a 35% stake in the Luarica mine in Angola, with Endiama holding a 40% stake in the same mine.
At present, Angola is the world’s fifth-largest diamond miner by value at $1,2-billion, South Africa is fourth at $1,3-billion, Canada is at $1,4-billion, Russia is at $2-billion and Botswana stands at $2,5-billion.
The potential impact on De Beers’ earnings and production from the Endiama joint venture is hard to quantify as economically viable kimberlite deposits need to be found, Tweedy said.
“Angola is highly prospective,” he added.
The Endiama joint venture is the fourth joint venture that De Beers has with African governments in diamond mining.
It has a 50:50 venture with the Botswana government at Debswana, a 50:50 venture with the Namibia government in Namdeb and a 75% stake in the Williamson mine, while the Tanzanian government holds the remaining 25%.
Outside Africa, De Beers is in the process of building mines in Canada.
De Beers produced 47,012-million carats of diamonds in its 2004 financial year.
Endiama’s key asset in Angola is the Catoca mine on the eastern side of the country in the Lunda Sul province, Tweedy said.
The Cotoca mine produces about three million carats of diamonds per year and is a joint venture between Endiama and Alrosa.
Alrosa has a 32,8% stake in Catoca, Brazil’s Diamond Finance (18%), Endiama (32,8%) and Odebrecht Angola (16.4%).
Endiama’s attributable production of diamonds is close to three million carats of diamonds per year.
De Beers, which has had a presence in Angola since 1975, has maintained an office in the Angolan capital of Luanda, despite the dispute with Endiama. — I-Net Bridge