Angola announced that it officially began diamond mining at its new Luele project. This project is the largest in the country and one of the world’s largest in terms of projected resources. This announcement comes at a time when the demand for diamonds worldwide is already beginning to decline.
Due to factors such as high borrowing rates in the United States, which account for 55% of worldwide demand, a subdued post-pandemic recovery in China, and competition from lab-grown diamonds, the market for diamond jewelry has been negatively impacted.
Catoca, a state-owned diamond miner in Angola, made one of the most significant discoveries in the diamond business in more than half a century when it discovered the Luele diamond deposit at the formerly Luaxe project in 2013.
One of the independent diamond analysts, Paul Zimnisky, stated that this particular mine is the only significant new diamond mine in the world that will begin production within the next ten years.
According to the project presentation, which Reuters viewed, Luele’s deposits include an estimated 628 million carats of diamonds with a lifetime of sixty years.
No information on the production plans for the project in 2024 was provided in the presentation. The world’s leading producer of raw diamonds in volume, De Beers, projects that the worldwide output of rough diamonds will amount to 121 million carats in 2022.
The facility used for the project will initially have the capacity to process 4 million metric tons of ore annually. Still, this capacity will gradually rise to 12 million tons over several years. According to the presentation, Luele has already mined five million carats of diamonds while still in the prototype stage.
The project’s beginning, worth 600 million dollars, comes at a difficult moment for the business.
In recent months, there has been a decrease in demand for raw diamonds. India, which is responsible for cutting and polishing ninety percent of the world’s rough diamonds, has requested that miners throughout the world refrain from selling the gemstones to manage the accumulated supplies.
According to Richard Chetwode, a consultant for the diamond business, “You can’t delay opening a mine, but I think it’s opening at a terrible time for diamonds.”
On the other hand, the project has the potential to bring in more budget earnings to the nation, which has been struggling with rising inflation, and to support future investment in the nation.
“It’s fair to say Angola is the most prospective nation for diamonds,” according to Zimnisky.
There has been a certain amount of volatility in the sector’s fundamentals over the past four years, but I believe that most of that volatility is now behind us. It was a unique condition where the pandemic, lockdowns, and stimulation were all implemented, and then that stimulus was removed.
Catoca, owned by Russia’s sanctions-affected Alrosa (ALRS.MM), now has a 50.5% share in the Luele project. Catoca is the owner of 41% of the company. Geologists employed by Alrosa contributed to the discovery of the diamond resource; nevertheless, the company did not get a direct share in the project.