De Beers to mine for diamonds in Angola

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Reuters

File picture: Stefan Wermuth

London - De Beers, the largest diamond producer by market value, hoped to obtain a concession to explore in Angola by the end of this year, chief executive Philippe Mellier said last week.

The London-based company, majority-owned by diversified mining house Anglo American, was also holding initial talks with India about exploring in some areas in the centre-north.

“We expect to have news about exploration licenses before the end of this year and we are in contact with the Angolan government to discuss that. We hope it’s going to be successful,” Mellier told Reuters in an interview.

Early stage work in Angola should start later this year, a company spokesman added.

Russia’s Alrosa, De Beers’ main competitor, already operates the Catoca mine, the world’s fourth-largest, in a joint venture with Angola’s state-owned Endiama.

De Beers previously explored for diamonds in Angola between 2005 and 2012 but concluded that a stand-alone deposit was not economic and relinquished its concession.

It was going back to explore a new area, which Mellier said was highly prospective.

Angola is the fourth-largest diamond producer by value, and sixth by volume, and the government is keen to boost a sector where few companies are drilling. But it needed to develop transport links and services for mining companies, and make geological data more accessible, a study published late last year said.

De Beers produced more than 31 million carats of diamonds last year at its existing operations in South Africa, Botswana, Namibia and Canada. The Botswana government owns 15 percent of De Beers, and Anglo the rest. With underlying operating profit of about $1 billion (R10.8bn) last year, the diamond producer was the third-largest contributor to Anglo’s earnings.

De Beers, which mines and distributes rough diamonds and manufactures and sells diamond jewellery under its Forevermark brand, said rough diamond prices rose by about 2 percent to 3 percent last year and increased by 2 percent to 3 percent this year.

Mellier said sentiment was upbeat this month at the Hong Kong international diamond show, seen as a barometer of the health of the industry.

“Expectations were high, as Chinese New Year was good and feedback is that it was in line with expectations or better.”

He expected 4 percent to 4.5 percent growth in the dollar value of the world polished diamond market this year.

The latest available data showed retail sales of diamond jewellery were worth more than $72bn in 2012; rough diamond production generated revenues of around $15bn, consultancy Bain said. – Reuters


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