The state company role of majority stakeholder is under review, writes Tom Burgis.
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Driven by excess global demand and a government in a hurry to exploit its resources, diamond companies are spending hundreds of millions of dollars prospecting as minority shareholders in joint ventures with the state company.
"The challenging thing is that you have an agreement for prospecting. Then you produce a viability study and you negotiate the rights to your mining contract," Charles Skinner, head of exploration at De Beers, told the Financial Times. "What's the rulebook going to look like? Nobody knows. It's high risk."
Angola produced diamonds worth nearly $1.3bn last year, a tenth of the global total, 70 per cent of which came from the lone kimberlite mine - which is yielding substantial amounts - with the balance from small-scale alluvial mining. Endiama, the state diamond company that controls all concessions, aims to increase production from almost 10m carats last year to 17m in 2010.
Endiama takes a stake of at least 51 per cent in all exploration ventures with foreign companies, which are obliged to fund prospecting under tight deadlines.
The terms are far more onerous than in traditional diamond countries such as South Africa, Australia or Botswana, where companies typically control concessions and pay royalties on what they extract. But as stocks elsewhere dwindle, miners have been lured to Angola by the potential for high-quality diamonds long prohibited by international sanctions against the rebels who until 2002 controlled the fields.