Angola's Rough Diamond Buying Guide

Angola is one of the world's largest producers of diamonds, with most of the country's diamond deposits located in the northeast, in the provinces of Lunda Norte and Lunda Sul. The country aims to become one of the top three diamond producers globally within five to ten years, with plans to increase diamond output by 25% over the next five years.

The Angolan government has implemented new policies to attract investment and increase production and revenue from the diamond sector, including a new system for selling rough diamonds that sets prices against an international benchmark and gives producers more say in choosing their buyers.

This guide will explore the process of buying rough diamonds in Angola, including the relevant laws and regulations, the different types of diamonds available, and the key players in the industry. It will also provide tips on how to find reputable suppliers and navigate the market safely and successfully.

Angola's new system for selling rough diamonds

Angola has implemented a new system for selling rough diamonds as part of President João Lourenço's efforts to increase investment, production, and government revenue. The previous system, which required producers to sell below international prices, has been replaced by a more transparent and effective approach. Here is a detailed overview of Angola's new system:

Setting Prices Against an International Benchmark

The new system sets the price of rough diamonds against an international benchmark, ensuring that producers can sell their diamonds at competitive rates. This change addresses the challenges faced by diamond producers in the past, who often struggled to make profits due to the previous system's constraints.

Greater Autonomy for Producers

Producers now have more influence in choosing their buyers. This shift breaks the monopoly previously held by the state-owned diamond trading company, Sodiam, which often favored buyers with political connections, leading to below-fair-value sales. Now, producers like Catoca, Angola's largest diamond mine, have the autonomy to sell up to 60% of their production to companies of their choice, including their trading divisions.

Pricing Stones Based on Nationally-Produced Samples

The new system introduces a benchmark based on a sample of typical nationally-produced stones, ensuring that pricing is more reflective of the local market and aligned with international standards.

Sales Sessions for Pre-Approved Diamond Buyers

Angola will conduct sales sessions for pre-approved diamond buyers, similar to the "sights" held by diamond group De Beers. This organized approach will bring structure to the sales process and attract reputable buyers.

Individual Auction of Rare Stones

Rarer stones will be sold individually via auction, ensuring that these exceptional diamonds receive the attention and value they deserve.

Stricter Oversight by the Ministry of Natural Resources and Oil

The Ministry of Natural Resources and Oil will have stricter oversight over the diamond industry, previously kept at arm's length by Sodiam and its parent company, Endiama. The Ministry will have the power to appoint independent evaluators to resolve disputes and set more transparent criteria for buyer selection.

Prioritizing Polishers and Jewellery Makers

The new system gives priority to polishers and jewellery makers over middlemen who simply resell the stones. This approach ensures that the diamonds are utilized for value-added activities within Angola, promoting local craftsmanship and downstream industries.

Stable Political Conditions and Attractive Investment Environment

The stable political conditions under President João Lourenço, who replaced former president Jose Eduardo dos Santos in 2017, have been instrumental in attracting diamond mining companies back to Angola. Lourenço's commitment to economic reform and addressing corruption has created a positive and welcoming atmosphere for investors.

New Capital Investment and Repatriation Policies

Angola has introduced new capital investment and repatriation policies, providing a more predictable framework for businesses looking to invest in the country's diamond sector.

Joint Ventures and International Partnerships

Endiama, the state-owned diamond mining company, has entered into joint ventures with international mining corporations, including ALROSA from Russia, Odebrecht from Brazil, and Daumonty Financing, a UK-based company owned by Israeli diamantaire Lev Leviev. These partnerships bring expertise, technology, and investment to Angola's diamond industry.

Development of Kimberlite Mines

Angola is focusing on developing its kimberlite or primary diamond resources, which require significant investments in infrastructure, equipment, and training. The full potential of the country's diamond industry lies in tapping into these primary resources.

Long-Term Vision for Diamond Production

Angola's Council of Ministers approved a National Development Plan aiming to increase the country's annual diamond production rate to 17.5 million carats by 2027, up from 8.76 million carats in 2022. This ambitious plan underscores the government's commitment to making Angola a leading diamond producer globally.

In summary, Angola's new system for selling rough diamonds is designed to attract investment, increase production, and boost government revenue. By addressing the challenges faced under the previous system, Angola is now better positioned to capitalize on its vast diamond resources and establish itself as a prominent player in the global diamond industry.

Rough diamond prices in Angola

Angola is the world's fourth-largest producer of diamonds, with only Russia, Botswana, and Canada producing larger volumes. The country has recently been trying to increase investment, production, and government revenue from its diamond industry.

Historically, diamond producers have struggled to make money in Angola due to a marketing system that forced them to sell at below international prices. However, a new system for selling rough diamonds is being planned, which will set the price of rough diamonds against an international benchmark and give producers more influence in choosing their buyers.

The price of rough diamonds in Angola depends on the style and the materials used to make them. The average U.S. dollar sales prices achieved for Lulo diamonds are among the highest of any alluvial mine in the world. For example, seven "exceptional" diamonds from the Lulo mine, including the 170-carat "Lulo Rose", were sold for $20.4 million at an international diamond tender, averaging $26,536 per carat.

In another instance, the Lucapa Diamond Company sold three exceptional diamonds for US$10.5 million at the first tender of Lulo diamonds for 2024. Lucapa's Q1 2024 results showed revenues of US$13.1 million, with rough prices down 41% from the previous year, from an average of US$1,350 per carat to US$798 per carat.

Rough diamond buyers in Angola

Angola is a highly attractive prospect for diamond buyers, with its vast potential for diamond prospecting. However, until recently, the country's diamond producers have struggled to make money due to a problematic marketing system that forced them to sell below international prices. This has resulted in an exodus of diamond mining companies.

In 2017, President João Lourenço took over from Jose Eduardo dos Santos, vowing to reform the economy and tackle the corruption and nepotism of the previous administration. As part of this, Angola is introducing a new system for selling rough diamonds to increase investment, production, and government revenue. This new system will allow producers to sell up to 60% of their production to companies of their choice and will give them more say in choosing their buyers. Rough diamonds will be priced according to an international benchmark, with an evaluation based on a price list that is "in line with the international market".

The new legislation also foresees stricter oversight by the Ministry of Natural Resources and Oil, which will have the power to appoint independent evaluators to resolve disputes and set more transparent criteria for how buyers are selected. The Ministry will give priority to polishers and jewellery makers over middlemen.

With these changes, Angola is set to become one of the world's top three diamond producers within five to ten years.

Angola's diamond mines

The country's diamond industry has faced challenges, including corruption, human rights violations, and diamond smuggling, which have deterred foreign investment. However, Angola possesses vast diamond resources, with an estimated 300 million carats in reserves, and has only explored 40% of its diamond-rich territory.

There are three notable diamond mines in Angola:

• Catoca Diamond Mine: Located in the Lunda Sul province, near the city of Saurimo, it is the largest diamond mine in Angola. Covering 64 hectares, it is considered the fourth-largest kimberlite mine in the world and the biggest among all kimberlite pipes in the Lucapa structure in northeastern Angola. The mine is a joint venture between the Angolan state diamond company Endiama (32.8%), the Russian diamond producer Alrosa (32.8%), China Sonagol (18%), and Odebrecht Mining (16.4%). In 2012, the mine produced 6.7 million carats of rough diamonds, generating revenue of $579 million.
• Luarica Diamond Mine: This mine produced 95,000 carats of diamonds in 2004 but was discontinued after the 2009 global financial crisis. Endiama announced plans to restart operations, and in 2013, they signed an agreement with Alrosa for geological exploration.
• Fucauma Diamond Mine: This mine is still under construction and was expected to produce approximately 480,000 carats over four years. However, mining operations were halted due to the 2009 global economic crisis, and Trans Hex, a part owner, withdrew from the project. Endiama intends to restart operations independently.

Angola is working to develop its diamond sector further and create an economic boom that benefits the entire country. A new development hub, the Saurimo Diamond Development Hub, is being constructed in the mining province of Lunda Sul. This hub will bring together all the actors in the diamond industry, stimulate growth, and add value to the industry by initiating diamond polishing within the country.

Angola's diamond exports

Angola is among the world's largest diamond producers by volume, accounting for 9% of global production. In 2022, Angola's diamond production amounted to 8.8 million carats, an increase of 1.1% compared to the previous year. The country is the third-largest producer of diamonds in Africa and is expected to become one of the world's three biggest diamond producers within five to ten years. Angola has only explored 40% of its diamond-rich territory and has set a target of a 25% rise in diamond output over the next five years. Exports of diamonds from Angola increased by 4% in 2023 over 2022, and its diamond exports are expected to grow at a CAGR of 9367% between 2023 and 2027.

One of the key challenges in Angola's diamond industry has been the marketing system, which obliged producers to sell below international prices. To address this issue, Angola plans to implement a new system for selling rough diamonds, setting prices against an international benchmark and giving producers more influence in choosing their buyers. This new system will also introduce sales sessions for pre-approved diamond buyers and auctions for particularly rare stones.

In addition to regulatory reforms, Angola has also implemented new capital investment and repatriation policies and new diamond marketing policies. All diamond marketing is regulated by Sodiam, the Angolan diamond trading company. However, under the new policies, 60% of the production from any mine is earmarked to be sold to their clients, 20% to clients of Sodiam, and the remaining 20% to diamond manufacturers and polishers in Angola.

Frequently asked questions