Angola Set to Change Diamond Industry to Attract Investment
In an effort to woo potential investors and offset economic hardship caused by falling oil prices, Angolan President João Lourenço has announced changes to the diamond industry.
In an effort to woo potential investors and offset economic hardship caused by falling oil prices, Angolan President João Lourenço has announced changes to the diamond industry.
Chief among those changes will be opening the channels of communication for more transparency.
Angola is Africa’s second-largest oil producer and the fifth-largest diamond producer in the world, but years of secrecy and bad policies have driven diamond miners away from its gem reserves. Lourenço is hoping to lure them back with his overhaul of the Angolan diamond-mining industry.
“We recognize that the policies for this sector, established by us, do not best serve the interests of the country nor of the producers,” Lourenço said in a speech earlier this week.
If the encouragement of the president isn’t enough to bring back miners, Angola’s vast untapped potential may be. Much of the country remains unexplored due to a 27-year-long civil war that created an inhospitable business environment when it ended in 2002.
Currently, Russia-based Alrosa (MCX:ALRS) is the only big-league diamond miner operating in Angola, but that could change if Lourenço is able to convince other key players to set up shop. Seventy percent of the country’s diamonds are exported to the United Arab Emirates, but enhanced diamond mining could allow more Angolan diamonds to hit the global market.
Although Angola’s leader did not give details or target dates, he noted a more detailed announcement would follow.
“We will soon announce the new framework for the diamond industry and we believe that with this, the big diamond mining companies will return to Angola,” Lourenço said.
In fact, the president has stated he wants to increase the amount of Angolan diamonds available in Antwerp, an international diamond-trading center known for its commitment to transparency.
The push towards transparency may be working. Last month, Lucapa Diamond (ASX:LOM) raised AU$16.5 million for work on its ongoing projects in Angola, Australia and Lesotho.
“Having operated in Angola for a decade, through some very difficult times, Lucapa is in a great position to benefit from these changes. We expect further progress this year,” Miles Kennedy, Lucapa Diamond’s chairman, said at the time.
Lucapa has already made quite a few significant discoveries in the African nation. At the beginning of May, the Australian diamond miner unearthed a 46-carat pink diamond from the Lulo mine, adding to discoveries of more than 10,100 carats already made at the gem-rich site.
Despite not commenting on specific targets, the Angolan president has said he wants to double diamond production in his country, something that would only be achievable if diamond miners RSVP to the invitation.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.