Angola’s major new Luaxe diamond deposit may start trial mining in mid-2020 and could produce 1 million carats of diamonds worth $90 million in 2020, Russian diamond producer Alrosa said.
Angola’s state-controlled diamond miner Catoca and Alrosa found Luaxe’s Luele pipe in 2013. Catoca has spent $200 million studying and developing it further and has said the pipe may turn out to be the largest discovery in the industry in 60 years.
“It will be one of the largest deposits in the world,” Vladimir Marchenko, Alrosa’s deputy chief executive in charge of its Africa business, told Reuters.
In November, Alrosa’s specialists finished reviewing a sample of Luaxe’s ore containing 45,000 carats of diamonds. This data will be used to complete the reserves audit, he said.
The pre-feasibility study is yet to come, and the scale of Luaxe’s future production will depend on the project’s economics and global demand.
Global diamond production, Alrosa estimates, will fall to 139 million carats in 2023 from a record of 151 million in 2017. Alrosa is the world’s biggest diamond producer by volume, it competes with De Beers, the largest by revenue.
In 2020, Luaxe’s ore will be processed at Catoca’s nearby mine. Catoca, in which Alrosa owns 41%, currently holds a 50.5% stake in the project. Both are discussing the final distribution of Luaxe’s ownership.
Angola, which aims to boost production to 14 million carats in 2023, is Alrosa’s number one priority in Africa, especially since the country dropped here the practice of obligatory sales via “privileged” companies and improved Catoca’s corporate governance.
The new diamond trade policy, approved by Angola’s president Joao Lourenco in 2019, made sales more transparent and boosted Catoca’s revenue by 30%, Marchenko said.
“It was a stimulus to expand our activities in Angola,” he added. Alrosa will spend $9 million on exploration in Angola in 2020-2022.
Speaking about Zimbabwe, which aims to triple diamond production by 2023, Alrosa said that its two-year exploration there would cost around $12 million.
A joint venture, in which Alrosa plans to finalize a stake of 70% in December, has applied for a number of greenfield licences.
Alrosa is also considering prospecting for diamonds in Mozambique, which borders gemstone-rich Tanzania and Zimbabwe. Its geologists will start studying documentation in December.
Alrosa, with 50% of revenue coming from sales in the United States and Western investors among its minority shareholders, has signed up to a process which helps to prevent “blood diamonds” – blamed for financing conflict and criminality in some poor African countries- from entering the global diamond trade.
Transparent and ethical business conditions are a must for Alrosa, in Africa and elsewhere, the deputy CEO said: “We will never risk the existing business when choosing new projects.”
Reporting by Polina Devitt; additional reporting by MacDonald Dzirutwe; editing by Elaine Hardcastle
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