Angola has officially started diamond mining at its new Luele project, the country’s largest and one of the world’s largest by estimated resources, it was announced on Monday, at a time when global diamond demand is already depressed.
Demand for diamond jewellery has been hit by high interest rates in the US, which accounts for 55% of global demand, a muted post-pandemic recovery in China and competition from lab-grown diamonds.
Angola’s state-controlled diamond miner Catoca discovered the Luele diamond deposit at the project, previously known as Luaxe, in 2013 in one of the diamond industry’s biggest discoveries in more than half a century.
“This is the only major new diamond mine in the world that will start production this decade,” said independent diamond analyst Paul Zimnisky.
Luele’s resources contain an estimated 628 million carats of diamonds with a life of 60 years, according to the project presentation seen by Reuters.
The presentation did not disclose the project’s production plans for 2024. De Beers, the world’s largest rough diamond producer by volume, estimates global rough diamond production at 121 million carats in 2022.
The project’s plant has an initial annual processing capacity of 4 million tonnes of ore per year, which will gradually increase to 12 million tonnes in a few years. During the pilot phase, Luele has already produced 5 million carats of diamonds, according to the presentation.
The $600 million project is being launched at a difficult time for the industry.
Demand for rough diamonds has been weak in recent months, and India – which cuts and polishes 90% of the world’s rough diamonds – has asked the world’s miners to stop selling it the gems in order to manage accumulated stocks.
“You can’t delay the opening of a mine, but I think it’s opening at a terrible time for diamonds,” said Richard Chetwode, a diamond industry consultant.
However, the project could bring additional budget revenue to the country, which is struggling with high inflation, and support future investment in the country.
“It’s fair to say that Angola is the most promising country for diamonds,” Zimnisky said.
“There has definitely been some volatility in the fundamentals of the industry over the last four years, but I think most of that is behind us for now. The pandemic, the embargo, the stimulus and then the unwinding of that was a very unusual set of circumstances.”
Catoca, in which Russia’s sanctions-hit Alrosa owns 41%, currently has a 50.5% stake in the Luele project. Alrosa’s geologists helped discover the diamond deposit, but the company was not given a direct stake in the project.
