Diamond Industry Republic of Annual Review Angola 2005
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Diamond Industry republic of Annual Review angola 2005 The Diamond Mining Companies & Social Geology of Angola ......... 2 Responsibility – A Drop in an Ocean of Need...... 7 Editorial History and Reconstruction............... 2 The Artisanal Sector ...... 8 During the war in Angola, a prominent diamantaire challenged one of the NGOs campaigning against Government Oversight .. 3 Diamonds and the Environment................... 10 conflict diamonds. “All you will achieve,” he said, “is to make it easier for corrupt governments to get Endiama and a larger share of the diamond wealth. Your campaign will not help poor people at all.” The challenge Transparency .................. 4 Illicit Mining and Smuggling..................... 10 was a sobering one. The best response at the time was an argument that smuggling and war SODIAM: Buying, would not help poor people either, and that getting the horse before the cart – establishing Selling and Kimberley ... 5 Operation Brilhante: Expulsion of Illicit peace first – was an essential precursor to good governance. Leviev’s Changing Role... 6 Certainly, however, none of the NGOs that have campaigned against conflict diamonds support Miners and Buyers....... 11 Mining Projects and Endnotes and a return to the bad old days of secrecy, corruption and mismanagement in the diamond industries International Companies. 6 of Africa. That said, with the end of the wars in Sierra Leone, Liberia and Angola, there are clearly Acknowledgements...... 12 some positive changes in the management of diamond resources. In Angola there are new investment codes, new environmental protection laws, and there are efforts to improve the access of Angolans to diamond mining opportunities. The question now is how much the rebuilding But there are serious problems as well. Although some improvements have been noted over process will benefit the majority of Angola’s peo- the past year, the government’s record on corruption and transparency remains poor. The justifiable ple, most of whom live in abject poverty. The expulsion of foreign diamond workers was badly handled. The effort to abolish artisanal mining development of roads, bridges, power and water defies the lessons of history, is unlikely to succeed, and shows that new policies are needed for the supplies will benefit the entire country, but the artisanal sector, so that more people can benefit from the country’s most accessible natural provision of education, health care, hospitals, resource. Three years of peace is enough time for an oil-rich, diamond-rich government to have housing, and jobs are needed if the interior is made wider social investments in the diamond areas and to have produced development policies to develop and if the wretched conditions there that are more supportive of Angola’s artisanal miners. are to improve. These same questions apply to This second Diamond Industry Annual Review focuses on the role diamonds play in Angola’s the diamond sector, the only major industry social development, and considers how the investment from a growing diamond industry is functioning in the interior. This Annual Review being deployed. Angola is likely to produce diamonds worth close to $900 million in 2005, mainly assesses the benefits that a growing diamond from the formal sector, resulting in much greater government revenue. It will also mean more industry is bringing – and is not bringing – to the direct investment from the private sector in local infrastructure and social projects. process of reconstruction. Development in Angola’s diamond industry is taking place in a changing political climate. The Diamond Industry Annual Review for 2005 marks the 30th anniversary of Angolan independence and the third year of real peace following Angola is one of three diamond industry surveys the ending of the civil war. Barriers to development can no longer be blamed on conflict, although prepared by Partnership Africa Canada and its reconstruction and capacity-building start from very low levels. The shattered and depopulated partners in Africa. Annual Reviews covering Sierra interior must be rebuilt and resources must be devolved from Luanda to the provinces. Leone and the Democratic Republic of the Congo The elections for the presidency and for deputies to the National Assembly, scheduled for are also being produced. In those countries, September 2006, will be the most important test of lasting peace. Elections, however, are not government cooperation has been readily likely to radically reshape the Angolan political landscape this time around. The constitution is forthcoming. Despite perceived shortcomings not being changed and agreements made under the Lusaka Protocol – the peace agreement in the management of the diamond industry reached with UNITA in 1994 – still stand. Holding elections will require considerable preparation. and disagreements over how these should be Voters have to be registered – in a country where many of those living outside the cities have presented, those governments have seen the neither identity cards nor personal documentation, and where even the size of the population Annual Review as a contribution to better and is unknown. There is also the problem of returning internally displaced people and refugees, and of wider understanding of an important industry. Angola’s large foreign population. In Angola, however, government cooperation But the most important question for the future has to do with the funding for, and the quality has been poor. One government official said of reconstruction in Angola. Problems in reaching agreement with the IMF have dominated the donor about the first Annual Review in 2004, “We do agenda. In March 2005, following a confrontation with the government over a $600 million oil not recognize the country you have described.” windfall, the Africa director of the IMF, Abolaye Bio-Tchane, said there had been some resolution That might be because the government did not of the issues. This could open the way to a long-awaited donor conference for reconstruction funding. grant most of our requests for interviews. The Angola is also looking to private funding for post-war reconstruction and development, and some same happened this year. The country and the is already in the pipeline in the form of a recent oil-backed $2.25 billion loan from Standard industry we have described might be more Chartered Bank and bilateral agreements signed with the government of China, during the visit recognizable to government, and the Annual of China’s Vice Premier, Zeng Peiyang in February. Angola and China had agreed on a credit line Review would certainly have benefited, had of US$2 billion in March 2004 with Eximbank of China, to be paid in oil at a fixed price. there been greater dialogue. Partnership Africa Canada Editor: Christine Gordon Ottawa, Canada Managing Editors: Josée Létourneau and June 2005 Dorothée Gizenga Ngolo Series Editor: Ian Smillie Kimberlite Pipes and Dykes Status of project Size m2 Caixepa n/a 24,000 The Diamond Camafuca-Camazombo Awaiting start of mining 480,000 Geology of Angola Camagico Under prospection n/a Angola may have the largest diamond reserves Camatchia Under prospection 292,500 in Africa, but only 40 per cent of the assumed Camatue 1 n/a 156,000 diamond resources have been prospected, Camatue 2 n/a n/a mostly during the early 1970s. New prospecting Camuazanza To be prospected 72,000 is expected to give a clearer picture of the Catoca In production 540,000 remaining alluvial resources and of the viability Chiri n/a n/a of Angola’s many kimberlite pipes. Endiama’s geology department is in the process of com- Luhinga I n/a 15,400 puterizing all the previous data from the last Luhinga II n/a n/a major prospecting exercise in the 1970s, and in Luhinga III n/a n/a overlaying new information obtained from dia- mond companies. Alluvial diamond reserves were estimated in At independence, Diamang ceased to function 2000 to be 40 million carats in the alluvial and History and due to lack of trained Angolan staff, but remained terrace deposits. This figure has undoubtedly Reconstruction the principal government diamond operation decreased, given the amount of garimpeiro digging until it was replaced by Endiama in 1986. After Diamonds, discovered in 1912 in Lunda Norte, that has taken place. These secondary (alluvial independence, Angola contracted a De Beers- are Angola’s second most important export, and eluvial) deposits of diamonds, between 80 owned company – MATS (Mining and Technical worth $763 million in 2004 and expected to rise and 120 million years old, are derived from Services Ltd.) – to mine. But by 1986 relations considerably over the next few years. Angola is eroded kimberlite pipes carried by glaciation with De Beers had collapsed, and UNITA forces, presently the world’s fifth largest producer of and river systems across wide areas. Secondary backed by the South African Defence Force, diamonds, and has the kimberlite reserves to deposits occur in the Lunda provinces, and in the were attacking and closing mines. be a bigger producer than Botswana. Angola’s provinces of Malange, Uige, and further south, Between 1986 and 1991, Endiama used con- industry has under-performed since independ- in Kwanza Sul, Huambo Bié, Kuando Kubango, tracted mining operators. Joint venture contracts ence, primarily due to the effects of war. It was Moxico Huila and Cunene provinces. In the were not introduced until after 1994, with the not until 2002 that official production rose to northern provinces, diamond deposits extend advent of a period of relative peace. The Lusaka pre-independence levels. into the Democratic Republic of the Congo. protocols gave UNITA the rights to nominate four Politically, the focus on Angola’s diamonds has There are also suspected offshore deposits Ministers, including the Minister of Mines and until recently been on the effects of conflict dia- along the coastline, although these have not other government officials, and the rights to three monds.