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Endiama to Boost Production Ahead of IPO

Dec 2, 2021 4:33 AM   By Avi Krawitz
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RAPAPORT... Endiama, Angola’s state-owned diamond miner, is aiming for annual production of 20 million carats in the next five years as the company restructures ahead of a proposed initial public offering (IPO).

“We are working so that Endiama can be exclusively engaged in its core mining business, with ongoing discussions to privatize part of the company,” CEO José Manuel Ganga Júnior said in an interview with Rapaport News during the Angola International Diamond Conference in Saurimo last week. “Endiama is 100% state-owned, and we have been entrusted to privatize up to 30% through a listing of shares.”

Ganga Júnior (pictured) expects the company to be ready to list on the Angola Debt and Stock Exchange by 2023. It is currently working to add the right assets to its portfolio to maximize its value, he added.

Part of the challenge, the executive noted, is to dispel the notion that Endiama still represents Angola’s entire diamond sector. The company used to be responsible for the full spectrum of the local pipeline, including issuing licenses and concessions, exploration, production, and trading.

Recent reforms enabled Endiama to focus solely on mining, he explained. The government created a separate agency to serve as concessionaire and handle licensing, while a new sales structure has also been implemented. Mining companies must sell 20% of production to Sodiam, the parastatal rough-trading company, and another 20% to local manufacturers, leaving the remaining 60% available for sales to the broader market. The country is also setting up a manufacturing and trading hub in Saurimo to add value to its growing rough production.

Endiama is seeking investors for its mining projects, including $200 million for the Luaxe mine, which is set to begin production next year. It also requires $250 million for the Sangamina kimberlite development and $30 million for the Luachimba alluvial project, Ana Maria Feijó, Endiama’s administrator for geology and mining development, said in a presentation at the conference.

Endiama’s portfolio is attracting interest. Alrosa holds a 41% stake in the country’s flagship Catoca mine. In October, Rio Tinto agreed to acquire a 75% stake in the Chiri exploration program in a joint venture with Endiama. The Angolan miner is also in talks to partner with De Beers on a project, expecting to sign a deal in the coming year, Ganga Júnior said.

“We need to have good diamond operators with good reputations because their presence means the implementation of best practice,” he stressed.

While those exploration deals give a foothold to future production, the country has set a target to achieve annual production of 20 million carats within five years, Ganga Junior said. Luaxe will boost production, adding 1 million carats next year before ramping up output in subsequent years. That site could potentially be bigger than Catoca, according to geologists at the conference.

Endiama’s production fell 11% to 7.9 million carats in 2020 but bounced back to 9.1 million carats this year, the company projected. It is planning output of 10.1 million carats and turnover of $1.4 billion in 2022.

Main image: Aerial view of Catoca mine. (Alrosa). Inset: José Manuel Ganga Júnior. (Endiama)
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Tags: Angola, Avi Krawitz, Catoca, De Beers, diamonds, ENDIAMA, Luaxe, Rio Tinto, SODIAM
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