Angola: Government seeks to help diamond sector

3 March 2009

Luanda, Angola, 3 Mar – The Angolan government is considering buying surplus precious stones and some private companies in the diamond sector in order to prevent its collapse.

The measure is part of an anti-crisis package aimed at reacting to the impact the global economic and financial crisis will have on two key sectors of the Angolan economy: oil and diamonds.

By purchasing the precious stones, which will be sold at the most favourable time, the government intends to help national companies withstand the sharp fall in prices, stemming from the lack of demand, estimated at 60 percent, from the traditional luxury goods markets, such as the US and Europe.

The anti-crisis package, which is also considering the injection of government funds into some projects, aims to guarantee the 10,000 to 15,000 jobs and avoid panic in a sector which generated US$1.6 billion for the economy last year.

Thwarting the optimistic forecasts of state-owned Endiama, which had indicated a figure of US$150 million in taxes paid by the diamond sector in 2009, the crisis situation began to worsen in the first few months of the year, jeopardizing some of the expected investments.

Of the 61 projects currently underway (14 at the production phase, 17 at the research stage and 31 still at the initial phase), some have already been suspended, as is the case of Petra Diamonds and BHP Billiton at Alto Cuilo.

Catoca, the largest Angolan mine and the fourth biggest open-pit mine in the world, the result of a joint venture between Endiama (32.8 percent), the Russian Alrosa (32.8 percent), the Israeli LLI Holding (18 percent) and the Brazilian Odebrecht (16.4 percent), is already feeling the effects of the crisis with one of its treatment centres suspending production and research work put on hold as cost-cutting measure. (macauhub)