Angola plans to change diamond market
Angola plans a new system for selling rough diamonds as part of President João Lourenço’s efforts to increase investment, production and government revenue, a draft decree shows.
Diamond producers say they have struggled to make money in Angola due to a marketing system that obliged them to sell at below international prices, leading them to largely shun one of the world’s most exciting prospects for the precious stones.
The draft presidential decree, which was seen by Reuters but could still be altered, includes a plan to set the price of rough diamonds against an international benchmark and give producers greater influence to pick their own buyers.
In addition, Angola will introduce sales that are open to pre-approved buyers, similar to De Beers’ sights. Exceptional stones will go up for auction individually at separate events, the report said.
Angola’s government will also increase its oversight of the sector, which previously had a lot of freedom as state-owned diamond companies Sodiam and Endiama had significant influence under former president José Eduardo dos Santos, the report continued. Under the reforms, ministers will have the power to appoint independent evaluators to intervene in disputes, and set more transparent criteria for Sodiam’s selection of buyers. That includes giving priority to polishers and jewelry manufacturers over traders who resell the diamonds.
Diamantino Azevedo, speaking on the sidelines of the 1st Consultative Council of the Ministry, said that the document approved by the government included a major alteration to the previous sales policy, in which contracts were signed only with “preferential customers,” a restricted group of companies that bought up the entire production.
The minister said he was anticipating the appearance of a larger number of companies interested in buying diamonds from Angola, whose sales process will be led by the mining companies themselves, under the supervision of public company Sodiam.
Meanwhile, the president of Angola’s diamond mining company, Endiama reported that gross revenue from the sale of diamonds in 2017 reached US$1.1 billion, following a production of 9.4 million carats.
The amount raised comes from the sale of diamonds at an average price of US$113 per carat, the president of Endiama said.
Mining company Sociedade Mineira da Catoca provided 89.22% of the total production, of which 70% was sold to the United Arab Emirates, Hong Kong, Belgium and Switzerland.
Sub-Saharan Africa’s third largest economy is trying to diversify away from oil and the decree said there was a “considerable difference between the country’s potential and the (diamond) industry’s actual impact on the national economy”.