Angola and Russia have committed to deepening their economic cooperation, not least in the area of mining. This was made clear during the recent visit to the African country by Russian Vice Premier Yury Trutnev. Among others, he held talks with Angolan state secretary for geology and mining Miguel Bondo Júnior. (Bondo Júnior’s status is equivalent to Deputy Minister in South Africa.)

The state secretary stated that the two countries intended to develop projects in the medium and long terms. These would be done in partnership with the National Diamond Company of Angola (Empresa Nacional de Diamantes de Angola, better known as Endiama) and the National Iron Company of Angola (Empresa Nacional de Ferro de Angola – Ferrangol).

During the last week of May, State-owned Endiama signed an investment contract with Russia’s predominantly State-owned Alrosa to launch the Luaxe diamond project. The signing ceremony was attended by Trutnev. At the event, Endiama president Carlos Sumbula stated that the investment required to develop Luaxe would depend on the technical-economic viability study, now being developed. Once this was concluded, the next phase would be mobilising finance in the markets. Previously, Endiama and Alrosa had indicated that they expected the required investment in Luaxe to be some $1-billion.

Luaxe is located in the province of Lunda Sul. The project is a joint venture between Endiama (with an 8% share), Alrosa (also 8%), the Catoca Mining Company (Sociedade Mineira de Catoca – 50.5%) and three other companies – Artcon (23.3%), Makakuima (5.2%) and Kollur (5%). It should be noted, however, that Endiama and Alrosa each hold 32.8% of Catoca. Luaxe lies some 20 km from Catoca.

Luaxe is regarded as one of the biggest kimberlite deposits in Angola. Alrosa President Sergey Ivanov has stated that the Luele pipe in the Luaxe concession was “the largest of all those discovered worldwide over the last 60 years”. Sumbula has affirmed that, once Luaxe is in operation, it will more than double Angola’s diamond production from the current 9-million carats to 20-million carats. Ivanov has estimated the market value of the diamonds in Luaxe at more than $35-billion.

During the conference call concerning Alrosa’s financial results for the first quarter of this year, which happened after Ivanov returned from the the signing ceremony in Angola, he was asked about press reports that the Russian group could increase its stake in Catoca by 8%. “I would abstain from citing any percentage of equity proposed for sale,” he replied. “Anyway, this is not sufficient to let us gain control, as yet. This may be attractive if the price is attractive. And, if any formal proposal is on the table, I think it would be incorrect for us not to consider it.” In response to a follow-up question, he added: “[At this point], we are going to focus on the current sales offer and, as I have already said, the stake offered for sale is not enough for us to gain control over Catoca.”