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Angola Eyes Antwerp as Ally in Diamond Reforms
Jun 14, 2018 4:55 AM
By Joshua Freedman
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RAPAPORT... Angola is seeking stronger ties with Antwerp as the southern
African nation looks to improve the profitability and transparency of its
diamond sector.
The country has failed to benefit sufficiently from its
diamond resources due to government policies, according to its president, João
Lourenço, who came to power in September and is planning to reform the
industry.
Catoca, the country’s largest diamond mine, lost $464
million over the past six years because producers were only able to sell goods
through Sodiam, the state-owned trading company, Reuters reported Monday,
citing an internal Catoca document. That policy has restricted miners’
revenues, as Sodiam could choose to whom it sold diamonds, often resulting in politically connected buyers obtaining goods at below-market prices, Reuters
said.
Engaging in trade with Antwerp could present an opportunity
to create value, according to Nishit (Bali) Parikh, president of the Antwerp
World Diamond Centre (AWDC). The Belgian city has a track record of generating
a 15% premium for producers that export their goods directly to the hub rather
than shipping them elsewhere, Parikh said in a speech during Lourenço’s visit
to Antwerp last week.
“It has been said that Angola has been absent from Antwerp,
but that is set to change,” Lourenço said while meeting AWDC officials. “We are
going to be represented in Antwerp, and will work together in partnership. The
responsible institutions have been instructed to see that Angola can return to
this great diamond center.”
Antwerp is the first diamond trading center Lourenço has
visited as president, the AWDC claimed. Angola’s transformation would involve both increasing rough
production and creating more employment through local processing and polishing,
Lourenço added.
Angola currently only exports 1% of its rough diamonds
directly to Antwerp, but some 50% end up in the city, Parikh noted. The African
nation ships 70% of its diamonds to the United Arab Emirates, according to
Reuters.
“If I can do better business by trading my goods through the
market in Antwerp, why would I send my goods somewhere else first, and then let
someone else get a better deal by sending them to Antwerp?” Parikh said.
Selling straight to Antwerp would also “show the world you
are serious about fostering transparency, and intend to follow through on your
message of change,” the diamantaire continued.
Lourenço has embarked on a reform agenda since taking over
from José Eduardo dos Santos, whose controversial rule lasted 38 years. Through
those changes, the nation hopes to attract more foreign diamond miners, Reuters
quoted Lourenço as saying. Alrosa — the largest rough supplier to the Antwerp
market — currently holds 41% of Catoca, which produced 7.2 million carats in
2016. The Russian miner is also an investor in Angola’s new Luaxe mining
project.
Angola’s total output was 9 million carats in 2016,
including other smaller deposits such as the Somiluana and Lulo mines,
according to data from the Kimberley Process. The country plans to double its annual production by developing Luaxe,
which, at full output, it expects to yield 10 million carats annually, Reuters
reported in 2016.
Sodiam and its parent company, Endiama, could not be reached
for comment.
Main image: AWDC president Nishit Parikh (center) talks with Angolan President João Lourenço in Antwerp. Inset: Lourenço with AWDC officials. Images courtesy AWDC.
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Tags:
Alrosa, Angola, Antwerp, AWDC, Catoca, ENDIAMA, João Lourenço, José Eduardo dos Santos, Joshua Freedman, Kimberley Process, Luaxe, Lulo, Nishit (Bali) Parikh, Rapaport News, SODIAM, Somiluana, southern Africa, transparency, United Arab Emirates
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