The Angola Diamond Rush: Importing Opportunities

Angola is one of the world's largest producers of diamonds, accounting for 9% of global production. Exports of diamonds from Angola increased by 4% in 2023 over 2022, and the country's diamond exports are expected to grow at a CAGR of 9367% between 2023 and 2027. In 2021, Angola exported $2.77 billion worth of diamonds, with the main destinations being the United Arab Emirates, Belgium, India, the United States, and Israel.

The history of diamond production in Angola is closely tied to the country's civil war, which lasted from 1975 to 2002. During the war, the diamond mines were constantly fought over, and both sides used diamonds to fund the conflict. The peace agreement signed in April 2002 enabled the country to get its diamond industry back on track.

Angola has vast diamond resources, with deposits found in the provinces of Lunda Norte, Lunda Sul, Malanje, Cuanza Sul, and Bié. The national diamond company, Endiama, holds the rights for prospecting, mining, sorting, and marketing of rough diamonds, and has entered into joint ventures with international mining corporations to develop the industry.

However, Angola has faced challenges in attracting foreign investment due to corruption, human rights violations, and diamond smuggling. The government has implemented measures to combat smuggling, such as Operation Brilliant, which resulted in the arrest and deportation of 250,000 smugglers between 2003 and 2006.

Diamond mining in Angola

Angola is one of the world's largest producers of diamonds, with the diamond sector forming a $1.2 billion industry. The country has a rich history of diamond mining, with the existence of rough diamonds first recorded as far back as 1590. However, it wasn't until 1912 that the discovery of viable diamond deposits was made by an American company prospecting in the Congo, which decided to expand its search southward into the Lunda area of Angola. The first alluvial diamonds were found in tributaries of the Luembe River.

The vast majority of Angola's diamond deposits are found in the northeast of the country, in the provinces of Lunda Norte and Lunda Sul. Angola's diamond industry is dominated by the state-owned diamond company, Endiama, which was established in 1981. Endiama has entered into joint ventures with several international mining companies, including ALROSA of Russia, Odebrecht from Brazil, and Daumonty Financing, a UK-based company owned by Israeli diamantaire Lev Leviev.

One of the most prominent diamond mines in Angola is the Catoca Diamond Mine, which is an open-pit mine jointly owned by Endiama, Russia's Alrosa, and Lev Leviev International. The Catoca mine has contributed to up to 75% of Angola's total diamond output and is recognised as the world's fourth-largest diamond mine. Another notable mine is the Luaxe Diamond Mine, located approximately 20 km from Catoca, which is operated by the Angolan government and Russian mining company Alrosa.

In recent years, Angola has made significant reforms to its mining policy, attracting diamond explorers and companies back to the country. These reforms include changes to regulations applicable to diamond mining companies, capital investment and repatriation policies, and diamond marketing policies. As a result, major players in the industry, such as Rio Tinto and De Beers, have returned to explore for major kimberlite deposits. With its vast mineral wealth and improved political and economic stability, Angola is well-positioned to become one of the world's top diamond producers in the coming years.

The Kimberley Process Certification Scheme

The KPCS is the mechanism used by the Kimberley Process (KP) to prevent the trade of conflict diamonds. Within the framework of the KPCS, trade in rough diamonds can only be conducted between industry members in KP participant countries. Government-sanctioned KP authorities certify KP-compliant stones leaving their borders. International shipments of rough diamonds are monitored when they enter a KP participant country, to ensure that they are accompanied by an official KP certificate.

Customs officials can seize rough diamonds lacking proper KP documentation, triggering alerts to all KP participants. KP participant countries must meet specific minimum requirements, including enacting national legislation, establishing controlling authorities, and embracing transparency and data exchange. Failure to comply can lead to sanctions or expulsion from the KP.

The Kimberley Process was initiated by the Government of South Africa in May 2000, in an effort to grapple with the problem of conflict diamonds. Concerned about how diamond-fuelled wars in Angola, Sierra Leone, and the Democratic Republic of the Congo might affect the legitimate trade in other producing countries, more than 50 countries have been meeting regularly to develop an international certification system for rough diamonds.

The KPCS has been successful in Angola, one of the three primary sources of conflict diamonds on the world market. The KPCS prevented the military wing of UNITA (National Union for the Total Independence of Angola), the rebel movement that had been led by Savimbi, from continuing to finance its armed struggle against the government. According to Global Witness, between 1992 and 1998, as the war raged on, UNITA earned at least $3.72 billion from illicitly obtained rough diamonds mined in the country. That constituted about 93% of all Angolan diamond sales during the period.

Diamond exports from Angola

Angola is one of the world's largest producers of diamonds, accounting for 9% of global production. In 2021, Angola exported $2.77 billion worth of diamonds, making it the 10th largest exporter of diamonds in the world. The main destinations for Angolan diamond exports are the United Arab Emirates, Belgium, India, the United States, and Israel. Exports of diamonds from Angola increased by 4% in 2023 compared to 2022, and are expected to grow further in the coming years.

The history of diamond production in Angola dates back to the early 20th century when viable diamond deposits were discovered in the Lunda region in the northeast of the country. The first alluvial diamonds were found in tributaries of the Luembe River in 1912, and diamond mining began in 1916. The industry was nationalized in 1977, and a state-owned diamond mining company, Endiama, was established in 1981. However, civil unrest and conflict significantly disrupted diamond production and exports from Angola for many years.

In recent years, Angola has made significant progress in developing its diamond industry and attracting foreign investment. The country has vast mineral wealth, and diamond deposits have been found in several provinces, including Lunda Norte, Lunda Sul, Malanje, Cuanza Sul, and Bié. The development of kimberlite mines, in particular, has been a key focus area, requiring substantial investments in infrastructure, equipment, and training.

To regulate the diamond sector and attract foreign investment, the Angolan government passed Law No. 16/94 in 1994, which vested all rights for prospecting, mining, sorting, and marketing of rough diamonds in Endiama. This enabled the state-owned company to partner with international mining corporations through joint venture arrangements. Endiama has since entered into joint ventures with companies such as ALROSA (Russia), Odebrecht (Brazil), and Daumonty Financing (UK).

Despite the challenges, Angola's diamond industry has shown remarkable growth and is an important contributor to the country's economy. The country continues to work towards maximizing the potential of its natural resources and establishing itself as a significant player in the global diamond market.

The Angolan diamond industry

Angola's diamond industry has been a key part of the country's economy for centuries. The existence of rough diamonds in the region was first recorded as far back as 1590, just 15 years after the territory became a Portuguese colony. However, the discovery of viable diamond deposits can be traced to 1912 when an American company prospecting in the Congo expanded its search into Angola's Lunda area. The first alluvial diamonds were found in the tributaries of the Luembe River.

The vast potential of Angola's diamond industry lies in the development of its kimberlite or primary resources, which require massive investments in infrastructure, equipment, and training. Angola is currently the world's sixth-largest producer of diamonds, with output up by 24% in 2023 compared to 2022. The country accounts for 9% of global production and is the third-largest producer of diamonds in Africa. Diamonds are the second-largest export for Angola, after oil.

The Angolan government has been trying to attract foreign investment to the diamond industry, particularly in the provinces of Bié, Malanje, and Uíge. However, the country has faced challenges in attracting investment due to corruption, human rights violations, and diamond smuggling. Angola loses $375 million annually from diamond smuggling, and the industry has been plagued by "murders, beatings, arbitrary detentions, and other human rights violations," according to journalist and human rights activist Rafael Marques.

The development of Angola's diamond industry has not been without challenges. During the country's civil war, which lasted from 1975 to 2002, the diamond mines were constantly fought over, making it unsafe for miners to work. Both sides in the conflict, the MPLA-led government and the UNITA rebel movement, used diamonds to fund their armed struggles. The Kimberley Process Certification Scheme, launched in 2003, played a crucial role in preventing UNITA from continuing to finance its military activities through diamond sales.

Diamond smuggling in Angola

The Angolan government has attempted to tackle the problem with various operations, including Operation Brilliant, which ran from 2003 to 2006 and resulted in the arrest and deportation of 250,000 smugglers. In 2018, the government launched Operation Transparency, which led to the departure of almost 400,000 illegal migrants, mostly from the neighbouring Democratic Republic of Congo (DRC). Diamonds worth over $1 million were seized during the operation, along with 59 weapons, and over 200 premises for illegal diamond trading were dismantled.

The country's diamond-rich provinces, such as Lunda Norte and Lunda Sul in the northeast, have been particularly affected by smuggling activities. The civil war that lasted from 1975 to 2002 also played a significant role in the diamond smuggling trade, with both the MPLA and UNITA using diamonds to fund the conflict.

The Kimberley Process Certification Scheme, established in 2003, has been instrumental in curbing the illicit diamond trade in Angola. The scheme prevented the rebel movement UNITA from continuing to finance its armed struggle, as they had earned at least $3.72 billion from illicitly obtained rough diamonds between 1992 and 1998.

Despite these efforts, diamond smuggling in Angola remains a challenging issue, and the country continues to grapple with the problem through various initiatives and operations.

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