De Beers, the world’s largest diamond miner by value, said on Tuesday it had applied to conduct exploration activities in north-eastern Angola, following reforms implemented by the country’s government to boost the sector.
The company, a unit of Anglo American (LON: AAL), and the country authorities will start discussions around a mineral investment contract, De Beers said. The agreement would set legally binding terms and conditions to be met by both parties for activities in north-eastern Angola.
The nation’s diamond industry, which began a century ago under Portuguese colonial rule, is successfully emerging from a long period of difficulty as a result of a civil war that ended in 2002.
Early this year, the Mineral Resources and Petroleum minister Diamantino Azevedo said he had instructed state-owned diamond company Endiama to negotiate with the biggest companies in the mining world to invest in the local diamond industry, without providing specifics.
Endiama is seeking investors for its mining projects, including $200 million for the Luaxe mine, which is set to open in 2022. It also requires $250 million for the Sangamina kimberlite development and $30 million for the Luachimba alluvial project.
“Angola has made significant progress towards creating a stable and more predictable investment environment in which the people of Angola can directly benefit from increased foreign direct investment,” De Beers CEO Bruce Cleaver said in the statement.
The government created an agency to serve as concessionaire and to handle licensing. Mining companies must sell 20% of production to Sodiam, the parastatal rough-trading company, and another 20% to local manufacturers, leaving the remaining 60% available for sales to the broader market. Angola is also setting up a manufacturing and trading hub in Saurimo to add value to its growing rough production.
This is not the first time De Beers ventures into Angola. Between 2005 and 2012 it carried out exploration activities, which ended without finding an economically viable project.
The country has plans to boost diamond mining and open a new large operation in the east, aiming to produce 5.7 million carats there in 2023, or more than half of its total output in 2020.
Angola – the world’s sixth-largest diamond producer – generated 8 million carats in 2020, 23% below the initial plan and down from 2019’s 9.4 million carats due to the global economic meltdown from the covid-19 pandemic. De Beers also owns diamonds mines in Botswana and Namibia.