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Angola Diamonds
Diamond mining began in 1912, when the first gems were
discovered in a stream in the Lunda region in the
northeast. In
1917 Diamang was granted the concession for diamond mining
and
prospecting, which it held until independence. Control
over the
company was obtained by the government in 1977. In April
1979, a
general law on mining activities (Law 5/79) was enacted
and gave
the state the exclusive right to prospect for and exploit
minerals.
Accordingly, a state diamond-mining enterprise, the
National
Diamond Company (Emprêsa Nacional de Diamantes--Endiama),
was
founded in 1981 and acquired the government's 77 percent
share in
Diamang. UNITA, which selected the diamond mining industry
as a
principal target, soon crippled mining efforts, and by the
beginning of 1986 the two foreign companies involved in
servicing
and operating the industry pulled out of Angola. By
mid-1986
Diamang was formally dissolved, leaving large outstanding
debts.
Attacks by UNITA on mining centers, disruption of
transport
routes, and widespread theft and smuggling caused diamond
sales to
fall to US$33 million by 1985 and to an estimated US$15
million in
1986. In late 1986, Roan Selection Trust (RST)
International, a
subsidiary of the Luxembourg-registered holding company
ITM
International, began mining in the Cafunfo area, along the
Cuango
River, the site of Angola's most valuable alluvial diamond
deposits
(see
fig. 9). Mining had been halted there for more than
two years
after UNITA attacked the mining camp in February 1984,
kidnapping
seventy-seven expatriate workers and severely damaging the
mining
equipment. After the subsequent kidnapping of a British
expatriate
in November 1986, defense forces in the area were
strengthened,
allowing the resumption of mining operations. In 1987
production
there averaged 60,000 carats, and about 120,000 carats
were
produced in the other two mining areas, Andrada and
Lucapa. By 1987
diamond production had risen to 750,000 carats, compared
with less
than 400,000 carats produced in 1986. The 1987 figure,
however, was
still not much more than 1985 production and only a little
over
half of 1980 output (see
table 9, Appendix A).
This increase in production has benefited from the rise
in the
price per carat received for Angolan diamonds. The
resumption of
mining in the area along the Cuango River and a decline in
theft of
stones of higher value in the Andrada and Lucapa areas
have
increased the value of output. Furthermore, Endiama, which
was
responsible for overseeing the industry and for holding
monthly
sales, has benefited from a general improvement in the
world
diamond market as well as dealers' willingness to pay
higher prices
in the hope of securing favored treatment in the future.
As a
result, average carat value established by the monthly
sales in
1987 exceeded US$110, more than twice as much as in 1985
(US$45)
and at its highest level since 1981 (US$119).
In 1987 Endiama signed a two-year mining contract with
the
Portuguese Enterprises Corporation (Sociedade Portuguêsa
de
Empreendimentos--SPE), a Portuguese company that has
retained a
large number of Portuguese technicians previously employed
by
Diamang. Former Diamang shareholders founded SPE in 1979
after
Diamang was nationalized. The precise terms of the
contract were
not made public, but it was thought that the company would
undertake new prospecting, which had been at a virtual
standstill
since independence. Through a subsidiary, the SPE also was
to help
Endiama with diamond valuation, which a British company
had been
carrying out. In December 1987, Angola also signed an
agreement
with the Soviet Union to cooperate in mining diamonds and
quartz.
Under the terms of the agreement, the Soviet Union was to
participate in mining enterprises and was to draw up a
detailed
geological map of Angola.
In 1987 the government also began to revise the 1979
mining law
to encourage new companies to invest in the diamond-mining
industry, in particular to resume prospecting. Among the
companies
believed to be considering investing in 1988 was Britain's
Lonrho
conglomerate, which had taken an increasingly active
interest in
Angola in the late 1980s. The South African diamond-mining
giant
DeBeers was also interested after it lost its exclusive
marketing
rights for Angolan diamonds at the end of 1985 because of
government suspicions that DeBeers had devalued Angolan
diamonds.
DeBeers has expressed interest in studying the kimberlite
pipes
(deep, subsurface deposits), which, because of the
depletion of the
alluvial deposits, were thought to represent the future of
the
Angolan diamond industry.
Data as of February 1989
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