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Lucapa Predicts Premium from Angola Reforms
Jan 14, 2019 7:59 AM
By Joshua Freedman
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RAPAPORT... Angola is set to host its first diamond sale under new
rules designed to improve transparency and prices.
Sodiam, a state-owned diamond-marketing company, will this month offer
seven large stones from Lucapa Diamond Company’s Lulo mine, including a
46-carat pink and six white diamonds ranging from 43 to 114 carats.
The Angolan government approved reforms last year that will
open sales to a wider range of buyers, Lucapa CEO Stephen Wetherall explained
to Rapaport News Monday. While previously miners had to sell their
diamonds to a list of buyers Sodiam selected, the new regulations allow
companies such as Lucapa to offer 60% of their production to clients of their
choice.
“By needing to sell to one of [Sodiam’s] buyers, eventually
there was no competition on the product itself, and therefore the prices were
not [in line with the] market,” Wetherall said. Rough is likely to fetch
“considerably more” under the new system, the executive noted.
Catoca, the country’s largest diamond mine, lost $464
million over six years because of the unfavorable marketing rules, Reuters
reported in June, citing an internal Catoca document.
Between 20 and 30 diamond companies from New York, Antwerp,
Israel, Hong Kong and other locations will attend the tender in Luanda, the
Angolan capital, which ends January 31. They will bid online for the goods,
ensuring the sale meets the industry’s transparency standards, Wetherall said.
“[This] is a unique moment of great importance that marks
the turning point in the trading of diamonds in our country, reflecting greater
flexibility and transparency in this sensitive and vital industry for our
economy,” said Diamantino Azevedo, Angola’s minister of mineral resources and
petroleum.
The rules state that producers may sell through long-term
supply contracts or spot auctions. Lucapa also received special permission to
hold tenders under the new regulations straight away, even though the government
isn’t expected to codify the new rules into law until later this month.
Angola’s rough-diamond production grew 4.6% to 9.4 million
carats in 2017, according to data from the Kimberley Process.
Image: The 46-carat pink diamond. (Lucapa Diamond Company)
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Tags:
Angola, Antwerp, Diamantino Azevedo, Hong Kong, Israel, Joshua Freedman, Luanda, lucapa, Lucapa Diamond Company, new york, pink, prices, Rapaport News, Rough tender, SODIAM, Stephen Wetherall, tender, transparency
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