Reasonable diamond concessions are available

30th April 2004 By: Steven Chiaberta

There are various potentially lucrative business opportunities accessible to South African companies and individuals willing to mine diamonds, or to offer products and services, to the diamond-mining industry in Angola, the world’s fourth-largest diamond producer. Prospects abound, especially in the prime diamond areas of Angola’s Lunda provinces and the Kuango river valley of Malanje province. “Scores of South African companies are now to be found mining kimberlites, quarrying and processing diamondiferous alluvials on flood plains, diving and scouring the potholes on the beds of rivers and supplying miners with the essentials of mining and life,” says South Africa–Angola Chamber of Commerce (SA–ACC) honorary CE Roger Ballard-Tremeer. Perhaps the only diamond opportunity remaining unexploited is the deposits along the Angolan littoral (sand dunes) and offshore – a situation that is largely due to official concern at the possible effects of such activity on the fishing industry.

For well-heeled and experienced miners, the one-in-seven kimberlites that may be gem-diamond-bearing may be found especially along the watershed along which the Benguela railway runs.

“While the long-hoped-for mother-of-all-kimberlites has yet to be found, there are many semi-kimberlitic alluvial and riverbed concessions available for those without mega-bucks. One will still have to spend many millions of rands to develop one’s concession,” Ballard-Tremeer explains.

Some of these lesser concessions have been geologically surveyed, though by no means all of them. Ballard-Tremeer stresses that it is critical to note that the decision on whether or not to go for a concession must depend, among other things, on a due-diligence survey or verification by independent experts with the direct experience, knowledge and skills to do so.

If the outcome of that survey is positive, it is essential that the final decision depends on a readiness of the entrepreneur to apply all resources necessary to establish, operate and control an efficient mining operation in an area that may be remote, inaccessible and very possibly booby-trapped and/or landmined. This is one of the biggest problems that exists in Angola’s diamond-mining industry. However, Ballard-Tremeer maintains that dealing with booby-traps and landmines is completely manageable if the diamond-mining entrepreneur is prepared to devote adequate resources to the task. “There are several de-mining companies and individuals that have the skills necessary to conduct the necessary preliminary and, later, full-scale due-diligence surveys and demining activities to mitigate this risk,” he states.

Once the area is accessible it is necessary to establish mining operations that will maximise the output of diamonds from the particular deposits in which they occur. The expertise required to do this differs, depending on the nature of the deposit.

The welfare of management and workers on the mines demands the utmost attention, because Angolan and South African law now demands it, and because of the threats of accidents, criminal activity and tropical diseases far from medical assistance. The physical security of people and assets at the mine, and the security of product both at the mine and during transportation to the facilities of a buying house are also not to be treated casually. “It is usually necessary to engage costly expert assistance to do justice to these aspects. However, despite these threats, there are many small and large diamond-mines operating profitably in Angola,” he informs.

Angola possesses some of the highest-quality kimberlite and alluvial diamonds in the world.

Rated second behind only those of Namibia in terms of quality, some 70% of its diamonds are considered to be gem quality, with 20% being near-gem and 10% industrial quality.

There have been two recent key developments in the industry in Angola.

First of these is the Angolan government’s commitment to the Kimberley Process, a decision taken by Southern African diamond-producing countries in 2000 to take action to stop the flow of conflict diamonds to the markets, while at the same time protecting the legitimate diamond industry.

Angola has introduced several measures aimed at ensuring that Angolan diamonds are mined and sold into world markets legally and accountably.

The second development is the relative liberalisation of the internal diamond-buying market. Given the fact that gem-quality diamonds are found throughout Angola, which is a relatively unpopulated country and is larger than South Africa, it will naturally take time to fully implement the measures that Angola has decided upon to bring control to the mining and buying processes.

“However, progress has been made, and the government’s commitment has been demonstrated. “Angolan diamond miners now have to sell their output to one of five diamond-buying houses rather than one, as was the case previously,” Ballard-Tremeer explains.

It would appear that the majority of diamonds now mined in Angola are indeed being controlled through this mechanism and that it is making a positive difference to the prices being paid to big and small miners.