The growth of Angola’s diamond production

Angola

José Manuel Ganga Junior, CEO of ENDIAMA, talks to The Energy Year about the company’s shift in strategy to ensure more growth and value creation for Angola and the potential of the Luele Mining Company. ENDIAMA is the national diamond company and exclusive concessionaire of diamond mining rights in Angola.

How is ENDIAMA’s strategy shifting to ensure more growth and value creation for the country?
During 2023, we have shifted towards managing our own mining operations. We have two mining concessions that are fully operational, Catoca and Luele, with the latter recently entering the production phase. The Luele project is a very significant development and is set to become Angola’s main mine and potentially a top global diamond producer.
Another key focus has been quantifying the diamond reserves across all companies and concessions. Part of our transformation from solely managing stakes to becoming active mining operators includes listing ENDIAMA on the stock exchange by 2027, which necessitates a comprehensive internal reorganisation and financial restructuring.

What is the potential of the Luele mining project?
The Luele project is immensely promising. We estimate its diamond reserves at around 600 million carats, with proven reserves extending up to 600 metres deep. However, the measurements aren’t yet finalised.
In terms of production, we anticipate approximately 20 million carats per year, which could potentially generate an annual turnover of around USD 2 billion. This long-term project, which is expected to last at least 40 years, is a significant investment for Angola. In terms of investment, the initial phase of operation is budgeted at about USD 500 million.

What are ENDIAMA’s topmost priorities for 2024?
For 2024, we’re aiming for a production of around 15 million carats and a turnover of USD 2.5 billion. We plan to bring more alluvial projects into production and to enhance the monitoring of our 33 prospecting projects. We’re focusing on speeding up the production of primary kimberlite sources, such as the Chiri kimberlite, in partnership with Rio Tinto.
We also have Mulepe, a known kimberlite site, for which we must gather economic and financial information and perform feasibility studies. Our goal is to gradually increase production levels.

Regarding ENDIAMA’s growth and its potential listing on the stock exchange, how crucial are international partnerships?
We recognise that we cannot do everything alone, so international partnerships are vital for our growth and eventual listing on the stock exchange. Recognising our limitations in knowledge and resources, we understand the importance of sharing knowledge, information, and business.
We’ve strategically aimed to attract top industry players. Currently, we have significant partnerships with companies such as De Beers, Rio Tinto and Alrosa, despite the current challenges due to the conflict in Ukraine, which we hope ends as soon as possible. We’re also expecting more partners, not necessarily those as large as De Beers or Rio Tinto, but those which are nevertheless equally important in the industry.
A key focus for us is enhancing the business environment, particularly in diamond marketing. Operators now enjoy complete freedom in choosing their markets and marketing their diamonds. We’re working towards institutionalising the diamond exchange to foster a more flexible and open market, encouraging competition among buyers.
Our commitment to high contract stability is noteworthy. This allows us to ensure there are no issues with exporting dividends. The positive business environment in Angola, which is increasingly open and transparent, is not just limited to the diamond industry. For instance, American involvement in our mineral resources sector is an indication of our openness and transparency, which will attract more global partners.
Our goal is to collaborate effectively with as many good partners as possible, steering our endeavours towards success.

How does Angola’s diamond sector compare with other diamond-producing countries in terms of attractiveness?
Angola’s diamond sector holds a competitive advantage due to its significant potential, which surpasses many neighbouring countries. While nations such as Botswana, South Africa, Namibia and the Democratic Republic of Congo are also key players in the diamond industry, Angola’s proven reserves and potential outmatch these countries.
Internationally, our potential, combined with that of other countries, is noteworthy, but domestically it’s very important too. Additionally, Angola offers competitive incentives in fiscal and legal management, aligning closely with regional partners. These factors position Angola’s diamond industry as a prominent and attractive player in the global market.

What are the medium- and long-term prospects for global diamond demand?
Despite current challenges and cyclical crises, the diamond market is expected to grow. Data suggests a potential annual increase in demand of 1- 2%. The current global economic growth, despite some cautious periods, supports a continued rise in demand. Notably, markets in China, India and other Asian countries, such as Singapore, Korea and Indonesia, are showing an increasing trend in diamond consumption.
However, the emergence of lab-grown diamonds presents a challenge, as these compete with natural diamonds. We’re collaborating with partners to emphasise the superiority of natural diamonds, particularly in terms of sustainability and their role in wealth creation and poverty alleviation. Our focus is to encourage preference for our natural diamonds.
Overall, despite the complexities of the current global situation, including conflicts such as the one in Ukraine and issues in key markets such as Israel, we remain optimistic about the medium- and long-term prospects for the diamond market.

How important are new technologies for decarbonising diamond producers’ operations?
New technologies are increasingly crucial, especially for adapting to best practices and technologies in the diamond industry. The Tech-Minas tool, developed in partnership with the National Office of Space Program Management, is a prime example.
This partnership enables us to better monitor our actions in all aspects. For instance, Tech-Minas allows us to perform scans that help define the tectonic structure underground up to 100 metres deep. This capability aids in determining where to start our study and prospecting activities.
Additionally, we can remotely monitor operations in real time, controlling and overseeing planning and execution aspects. These technological advancements are integral to geological mining management and are vital for the industry’s progress.

What is the importance of renewable energy generation projects alongside mines?
Renewable energy generation alongside mining is a significant challenge and opportunity, which is important for potential investors as well. Our industry isn’t limited to just mining and marketing. It includes a range of parallel businesses that support mining activities. Currently, private companies predominantly generate energy, which is essential for all mining operations. For instance, mines such as Catoca and Luele require about 40 MW of generation capacity.
Unfortunately, most energy is still produced using fossil fuels. We are collaborating with various companies to establish solar energy plants, opening up a new market. We’re also working with the Ministry of Energy and Water to explore the possibility of establishing contracts with the government for energy distribution.
Although this energy hasn’t reached the Lundas region yet, there are plans to extend the power grid eastward to Lunda Norte, Lunda Sul and Moxico, with opportunities for private company involvement. This open market extends beyond energy to other services such as maintenance and construction and will provide significant economic benefits for these regions.

How strategic is the diamond mining industry for Angola’s economy?
Our main assets at ENDIAMA are firstly our people. The diamond sub-sector employs about 20,000 workers across various sites. We’re currently managing around 33 prospecting projects to expand our diamond reserves. Additionally, we have about 18 companies already in production. Our diamond reserves are among the most significant globally, estimated at 700 million carats.
Overall, our assets include our workforce, operational mines and ongoing efforts to increase reserves. These assets are positioning us to become one of the top diamond producers worldwide.
We envision ENDIAMA as a modern, strong, sustainability-focused company, with a pronounced concern for the people and the environment. Despite the environmental impact of mining, we aim to restore and improve the environment post-mining, ensuring continued happiness and sustainability for local communities. We’re aligning our goals with global sustainability standards and practices.

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