Diamond Miner Alrosa Says New Angola Operation Could Bring $90mn a Year

Russian diamond producer Alrosa said on Wednesday that Angola’s major new Luaxe diamond deposit may start trial mining in mid-2020 and could produce 1 million carats of diamonds worth $90 million in 2020, Reuters writes.

Luaxe’s Luele pipe was discovered by Angola’s state-controlled diamond miner Catoca and Alrosa in 2013. Catoca has spent $200 million studying and developing it further and has said the pipe may turn out to be the largest discovery in the industry in 60 years.

“It will be one of the largest deposits in the world,” Vladimir Marchenko, Alrosa’s deputy chief executive in charge of its Africa business, told the news agency.

In November, Alrosa’s specialists finished reviewing a sample of Luaxe’s ore containing 45,000 carats of diamonds. This data will be used to complete the reserves audit, he said.

The pre-feasibility study is yet to come, and the scale of Luaxe’s future production will depend on the project’s economics and global demand.

Alrosa estimates global diamond production will fall to 139 million carats in 2023 from a record of 151 million in 2017. The company is the world’s biggest diamond producer by volume and competes with Holland’s De Beers, the largest by revenue.

In 2020, Luaxe’s ore will be processed at Catoca’s nearby mine. Catoca, in which Alrosa owns 41%, currently holds a 50.5% stake in the project. Both are discussing the final distribution of Luaxe’s ownership.

Angola, which aims to boost production to 14 million carats in 2023, is Alrosa’s number one priority in Africa, especially since the country the practice of obligatory sales via “privileged” companies and improved Catoca’s corporate governance.

The new diamond trade policy, approved by Angola’s president Joao Lourenco in 2019, made sales more transparent and boosted Catoca’s revenue by 30%, Marchenko said.

“It was a stimulus to expand our activities in Angola,” he added. Alrosa will spend $9 million on exploration in Angola in 2020-2022.