A key player in the growth of mining in Angola

Angola

Benedito Paulo Manuel, director-general of Catoca Mining Society, talks to The Energy Year about the company’s key latest milestones, its approach to innovation to tackle challenges and ensure profitability and growth, and the role it plays in helping Angola’s mining sector to progress. Catoca produces and markets diamonds from its operations in Angola.

Can you tell us about some of the main achievements you’ve made as director-general of Catoca Mining Society?
Although I recognise that there is still much to be done, I feel honoured to be part of the development process of Angola’s largest mining company, Catoca Mining Society, actively contributing to the development of our country, a job that impacts the lives of thousands of families.
One of the main achievements I’m proud of is the fact that, despite all the contextual challenges, we’ve managed to put people at the centre of our management, without damaging production indicators and, consequently, shareholder expectations. In other words, despite all the adverse situations, we have improved our production indicators and the quality of our processes, and this has had a positive impact on our financial strength.
And when we say that we put people at the centre of management, it translates into our commitment to improving the living conditions of our workers, with a very strong focus on improving the benefits package, with the salary in the spotlight and all the other perks that allow us to say that today, in the country, and perhaps on the continent, Catoca Mining Society is among the companies with the best benefits package for its workers.
Our commitment is not just limited to our workers. It goes far beyond our gates, because from very early on we committed ourselves to being a catalyst for economic and social development, which is the reason that in addition to having more than 20,000 indirect jobs, we invest annually in a vast portfolio of social actions ranging from education, health, combating hunger and agriculture to youth and sports and culture, programmes that are impacting on the lives of thousands of families, helping them to build new perspectives on their future.
We’re very proud of this, and it’s important to stress that when in recent years many organisations have slowed down their investment in social areas, despite the very adverse context, we’ve taken on the challenge of stepping up our commitment to this social component.

In 2021, Catoca experienced a shortage of equipment and spare parts on the international market, which required innovative solutions and resourcefulness. Can you name some of the most significant difficulties you’ve overcome and the techniques you’ve used to succeed?
We have major challenges every day. It’s difficult to list them because there are many challenges to overcome every day, some for which we have to create our own solutions, which allows us to say that we have produced science and technologies that can serve as a basis for the activity of other mining companies around the world.
But despite all the challenges we face on a daily basis, the Covid-19 pandemic was one of the most challenging moments, especially given all the uncertainties surrounding the situation, where we almost didn’t know exactly when it would end and there were stock-outs of almost every type of material needed to maintain production. The factories were at a standstill and the few who had some stock could even sell, but the ships were all docked in the harbours, keeping all the logistics platforms literally closed.
On the other hand, we had to deal with our internal issues. In order to protect the lives of our workers, in compliance with the biosecurity measures decreed by the health authorities, without prejudice to anyone’s salary, we kept only 30% of the workforce working in person. And it’s important to emphasise that this effort was made at a time when we hadn’t recorded any sales for more than seven months because the main international diamond markets were also paralysed.
The fact is that we managed to overcome the situation, maintaining production, people’s jobs and a strong social commitment, which allowed us to help the country overcome the Covid-19 situation, and here more specifically through direct support for the provincial governments in the region where we are based.
Among so many daily challenges, we have to deal with and overcome restrictions imposed by external shocks from the perspective of market conditions, namely price equilibrium, but more than that, it has to do with the supply chain (heavy machinery and highly specialised services) that we have to buy outside the African continent, and which we often find very difficult to access. This reality could be different if these service providers had their bases in Africa and preferably in Angola, given the geological-mining potential.

The diamond industry is highly competitive and constantly changing. What creative measures have you implemented at Catoca to guarantee long-term profitability and growth in such a volatile market?
Price volatility requires a lot of caution so that we don’t end up in a situation where the marginal contribution is negative. We have exercised the necessary caution, adopting very strict production plans in terms of cost control and fairly modest sales price forecasts. This positioning has allowed us to mitigate negative impacts, giving us room to manoeuvre in cases where there is some negative variation in prices. Another measure that has had an effect has to do with slowing down sales and waiting for the best times when the international market sees a slight reduction in supply and a consequent rise in prices.
To ensure the company’s growth, we are committed to increasing diamond reserves by locating new kimberlites and participating in other mining projects, such as the Luaxe [Luele] mine, known for having some of the largest reserves discovered in recent years. On the road to development, within the framework of our vision for the company’s development over the next 10 years, we aim to enter other business areas within mining, taking advantage of the vast potential opportunities offered by the Angolan and African markets.

Could you shed some light on the strategies and initiatives that contributed to Catoca generating a profit of USD 270 million in 2021?
2021 was one of our best years in terms of financial results and this was due to a combination of factors, most notably the improvement in operational efficiency and significant gains in terms of cost reduction. Market behaviour also played an important role in that the Catoca diamond was selling at a good price, above USD 120 per carat.
In short, the profits made in 2021 were the result of a combination of efficient management and good market behaviour. But today, the mine’s geotechnical conditions naturally impose a gradual and substantial rise in production costs, after 28 years of existence. And this is one of the major challenges we have to deal with in the coming years, aggravated by the low grade recorded at this stage when we are overcoming a very rocky area of the mine.

Despite difficulties in the last few years, including the global recession, the Covid-19 pandemic and their effects on the global mining industry, Catoca has maintained production levels and manpower, adopting remote working. How did you guide Catoca through these difficult circumstances, ensuring the safety of employees and minimising the impact on production and financial performance?
It was one of the most challenging times as director-general of Catoca Mining Society. We had many questions about the post-Covid-19 future and almost no answers. Nobody knew if we would resist, if we would be forced to stop production completely, if the safety measures adopted would actually guarantee people’s safety. The only certainty we had was our conviction that we would do everything to protect people’s lives, the company and the thousands of direct and indirect jobs and all the other positive externalities for the benefit of the country.
In other words, we adopted all the biosecurity measures decreed by the health authorities, placing more than 60% of the workforce at home to comply with social isolation, but without affecting their salaries and all other benefits. We renegotiated contracts, keeping only essential services and all the other measures that allowed us to reduce costs. In this way we were able to maintain production and the salaries of all the workers, even without earning any revenue for more than seven months, because the main international markets for selling diamonds were paralysed.
Even so, we maintained our social programmes and honoured all our financial commitments to our suppliers and the authorities. We are very proud to have travelled this road on our own two feet, with the support of the government, the shareholders and each and every one of the workers at Catoca Mining Society.

Can you explain your role in creating this favourable environment for investors and how this has benefitted Catoca’s operations? In the future, what are your aspirations for Catoca? Is there anything new on the horizon that will strengthen the company’s position as a leader in the diamond industry?
According to the answer to the previous question, Catoca Mining Society is an indispensable player in the progress of mining in Angola. Our experience, the quality of our technicians, our technological expertise and our financial strength make us a key player in the growth of mining in Angola in particular and in Africa in general. We are aware of this and are committed to this challenge, that’s why we are already taking steps to enter other areas of the mining chain outside of diamonds.
We know Angola’s geological and mining potential and all of its opportunities. We are also aware of the need to create an ecosystem that will allow more business to emerge and better conditions for mining in Angola, especially in terms of the supply chain. In other words, we can see our position as a promoter of the emergence of activity in other mining segments in Angola, such as gold, for example.

As a leader who has positioned Catoca as a prominent player in the mining industry, what advice would you give to future professionals who want to make a substantial impact in this difficult field?
My advice would be to seek out knowledge and adopt a stance based on ethics and respect for internationally accepted good practices so that we can convert potential wealth into wealth and quality of life for people and the development of the country.
I personally have been betting on the emergence of a new generation of highly qualified professionals, capable of leading teams and promoting the development of mining companies. We are doing this by placing many young people in intermediate positions in our management structure, placing them in positions in the second and third lines of management, so that they have contact with the processes and develop the necessary experience for there to be a normal generational transition in the future. But this will have to be done ethically and very professionally for the benefit of the different stakeholders.

How do you define success and what legacy do you want to leave in the mining industry?
Success is the positive impact I make on people’s lives. I consider it a success when my goals and actions generate positive impacts. And the legacy I want to leave, especially to younger people, is that we can all do more and better to make our country, and the world as a whole, an ever-better place for everyone. And this is only possible if each of us contributes to the development of the organisations and societies in which we find ourselves.

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