Angola making progress in strengthening its precious stone sector

Angola making progress in strengthening its precious stone sector

Angola has launched a limited public tender to contract three independent diamond evaluators to evaluate the some 9.2-million carats of rough diamonds produced in the country each year.
The contracts would fall under government’s services provision regime. The tender is open to both Angolan and foreign bidders, but proposals must be submitted in Portuguese. To win, the bidders will have to have good references with regard to their use of international (presumably, best) practices for evaluating the precious stones. The tender closes on April 6, and the bids will be opened on April 7, with the results announced during the second fortnight of that month.

According to the head of the commission overseeing the tender process, Mankenda Ambroise, Angola currently has only one independent rough diamond evaluator. Ideally, there should be five. “We are going to start with three evaluators, a number which will allow us to assess the production criteria [and] market prices, and comply with the Kimberley Process,” he said.

The Kimberley Process is an international initiative to prevent conflict diamonds – defined as “rough diamonds used to finance wars against governments” – from being traded internationally.
The process embraces governments, industry and civil society organisations.
Separately, the State-owned Sociedade de Comercialização de Diamantes de Angola (the Diamond Commercialisation Company of Angola, better known by its Portuguese acronym, Sodiam) has reported that the change in the way diamonds were commercialised in the country, introduced in July 2018, had increased tax revenues from the sector by 41.6% over the past two years. The new system had also increased gross revenues by an average of 8.5% a year, compared with the average growth rate of 2.3% in 2016/2017.

Moreover, in the words of Sodiam’s statement (issued in Luanda), the new system “brought competition and transparency to the sector, which was hitherto nonexistent”. The previous rough diamond selling system was in force from 2012 (when Eduardo dos Santos was still President of Angola) to 2018 (during the first year in office of current President João Lourenço, who was inaugurated in September 2017).

The basis of the previous system was a ‘preferred customer’ approach, under which, every year, the country’s President approved a list of companies that were granted preferred customer status and which stated the proportion of that year’s rough diamond production that they could buy. These preferred customers, Sodiam affirmed in its statement, had exclusive access to the market; only they could buy diamonds from the State company. And they were able to do so at below-market prices.

Unsurprisingly, the then new Lourenço administration found this system, in Sodiam’s words, to be “severely prejudicial” to the Angoplan government’s finances.
This led to the promulgation of a new Policy on the Sale of Diamonds, which is now in effect. In terms of this policy, Sodiam, the country’s currently solitary evaluator, and the diamond miner, jointly agree a base reference price for the rough diamonds. These are then offered on the market; to successfully purchase them, the bidder must offer a price at least equal to (but preferably higher than) the base reference price.

Under the new system, more than 120 businesses have now registered as Sodiam customers. Three new diamond cutting and polishing factories have been opened in the country, taking the total to four. Last May, 12 two-year purchasing contracts were signed, including contracts with all four of the cutting and polishing facilities. These contracts will remain in force until the end of the first semester of next year.