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Angola to grant De Beers new diamond exploration licence

11th April 2014

By: Reuters

  

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LUANDA – Angola, the world's fourth-largest diamond producer by value, will approve a new concession to mining major De Beers to explore for diamonds, Geology and Mines Minister Francisco Queiroz has said.

London-based De Beers, majority-owned by global miner Anglo American, previously explored in Angola between 2005 and 2012 but relinquished its concession.

“The company made that big investment in prospecting, and, unfortunately, it didn't have great results, but it is making a new bid and another investment will be approved," Queiroz told the Reuters Africa Summit on Thursday.

De Beers CEO Philippe Mellier said last month the company hoped talks with Angola would be successful, with a view to starting early-stage work this year.

“De Beers has been negotiating with [State-owned diamond firm] Endiama, and it is welcome in Angola as it has been in the country for a long time, even before independence from Portugal in 1975," Queiroz said.

The government of Angola, the world's sixth-largest diamond producer by volume, was keen to boost a sector in which few companies were currently drilling.

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

Queiroz said a new deal between Endiama and Alrosa, announced in February, to explore in eastern Angola could produce huge results, with the Russian firm to spend $15.5-million on rights and over $150-million if deposits were found.

“De Beers and Alrosa could help contribute to a boom in Angolan production in a short space of time.”

Even before those projects began, Angola already planned to boost production to 9.5-million carats in 2014 from last year's 8.5-million, because of three mines that opened recently.

GEOLOGICAL SURVEY STARTS

Angola was Africa's second biggest oil producer and had grown rapidly after a 27-year civil war ended in 2002, but the government wanted to reduce reliance on crude oil output, which brought in over 95% of export revenues.

It planned to tap other mineral resources, which analysts said were extensive, but had been held back by a lack of data.

The government had set up a $405-million survey to find deposits of iron, copper, gold, manganese and other minerals.

“The preparation work is done, and now one of the three companies hired to do the survey will start mapping this month, with the other two no later than June,” Queiroz said.

The results, due in three to five years, would allow investors to make informed decisions, while a more competitive mining code, approved in 2012, would help.

The Minister said giants such as Rio Tinto, Brazil's Vale, and Anglo American had shown interest.

“I am sure they will end up working here,” he remarked.

Queiroz said that, in the meantime, Angola was pushing ahead with projects to explore for iron-ore, copper and phosphate.

But the $900-million Cassinga iron project, a joint venture between State firm Ferrangol and private operators, including trading house Trafigura, had hit financial problems and may have to proceed more gradually, the Minister said.

“The total investment for the project will perhaps be even higher than that figure, and the investor has had financial trouble in this launch phase," the Minister said.

“The solution might be to do it by bits, start with what has already been identified, lower the budget needs and only then do the rest of the project.”

Edited by Reuters

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