The diamond sector in Angola anticipates recovering a deficit of nearly 1.4 million carats in the second half of the year, aiming to meet the annual production target of 14.6 million carats by year-end.
Miguel Vemba, Director of Endiama’s Mining Operations and Holdings Management, shared these insights during the Semiannual Diamond Production Balance Workshop held from July 7-8 in Lunda-Norte.
In the first half of 2024, Angola produced approximately five million carats of diamonds, generating $606 million in revenue, which accounts for just 80% of the sector’s goals.
These figures fell short of the initial revenue forecast of $2.5 billion, primarily due to a 30-40% drop in the average diamond price.
Despite the challenges, Vemba urged producers to approach the second half of the year with resilience, with hopes of recovering previous price levels and reaching at least $2 billion in revenue.
“We believe that by year-end, the diamond sector can reach the target of 14.6 million carats; however, revenue is more challenging due to external market factors,” he noted, adding that diamond prices are expected to remain low for some time.
Sector Strengthening Initiatives
Vemba highlighted that the recent operation of Sociedade Mineira do Luele, inaugurated by President João Lourenço in Saurimo, has positively impacted production levels compared to the same period last year. In the first half of 2023, production reached 9.7 million carats with revenues of $1.5 million.
In addition to the 24 operating companies, Endiama anticipates the addition of Sociedade Mineira do Muquita, making it the 25th operational entity by year-end. Endiama currently oversees 54 companies engaged in prospecting activities.
The workshop also addressed various challenges within the sector, including geology, exploration, ore treatment, production, recovery, economic performance, human resources, and sustainability, along with operators’ social responsibilities toward local communities.
Collaboration with Banks
Endiama’s Chairman, José Ganga Júnior, announced ongoing negotiations with Angolan commercial banks to support diamond companies in managing cash flow during this challenging period, attributed to declining sales prices in the international market.
Ganga Júnior noted that over the past two years, diamond sales prices have fallen by 35% to 57% of the average price, raising concerns about the absence of recovery signs in the second half of the economic year.
He urged operators to adopt resilient organizational management and collaborate with suppliers and banks to maintain cash flows, even if they do not sell all their production.
Ganga Júnior emphasized the importance of geological prospecting, especially for companies engaged in alluvial exploration, to better understand existing reserves.
He warned that mines such as Chitembo, Chissema, and Luachimo are at risk due to inadequate prospecting efforts. He suggested that halting production to focus on prospecting may be necessary to prevent future complications.
