De Beers plans a return to diamond-rich Angola

Diamond giant De Beers plans to resume operations in Angola early next year as the country emerges from civil war and seeks to end an unsuccessful state gem marketing monopoly, officials said on Monday.

De Beers, which suspended operations in Angola in May 2001 after a dispute with the government, will return to the country and take charge of marketing all diamonds produced by a new venture with state-owned diamond miner Endiama, Reuters reports.

A senior source at Ascorp, which has been marketing all Angolan diamonds since it was created in November 1999, confirmed that the company expected to lose its monopoly in mid-January next year, Reuters reports.

De Beers and Endiama said in a joint statement that talks on new concession contracts were going well and were expected to reach agreement by the end of February. “Endiama and De Beers reiterate their commitment to continue to act in good faith…(and to) bring benefits to the Angolan diamond industry,” the statement reportedly said.

De Beers, 45% owned by Anglo American, controls around 65% of the world’s $8 billion market in rough diamonds from Russia, Australia, Canada, and southern Africa.

Chairman for De Beers Angola, Gaspar Cardoso, said the talks would lead to the creation of a new diamond mining and marketing company, Reuters reports.

“We are trying to reach a satisfactory agreement for the shareholders (Endiama and De Beers). The company will be created after the negotiations are over and the council of ministers will authorize the creation of this company,” he told Reuters.

The council of ministers, which is made up of senior government officials and headed by the president, takes decisions about large foreign investments in Angola.

Cardoso said the new company would be granted exploration and mining rights for Angolan diamonds, which would then be marketed worldwide through De Beers, Reuters reports. He expected the first projects to get under way in the first half of 2003. De Beers’ return to Angola would signal the end of the monopoly held by Ascorp, in which veteran Israeli diamond dealer Lev Leviev is a major investor.

Ascorp, 51% owned by the Angolan government, has been criticized by diamond producers who say they are paid less than going market rates for their gems.