Angola sees Zimbabwe ties for diamond producer Catoca

Thu Feb 7, 2013 2:20pm GMT

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* Says sure worth investing in Zimbabwe's diamond potential

* Project to map Angola's mining potential begins this year

CAPE TOWN Feb 7 (Reuters) - Angola's Catoca, one of the world's largest diamond producers, could invest in diamond exploration and production in nearby Zimbabwe, Angola's mines minister said on Thursday.

The Catoca mine, whose shareholders include Russian diamond giant Alrosa and Angolan state diamond company Endiama, produces the bulk of the country's diamonds.

Industry analysts estimate that in just over a decade of activity, Catoca alone has produced almost a third of the total number of gems mined in Angola in a century of mining.

Angola is keen to boost a traditionally strong diamond sector where few companies are currently drilling, but is also seeking to diversify both its own mining sector and the portfolio of its companies.

"Catoca is a major company, with accumulated experience, and it is capable of investing outside Angola," Mines Minister Francisco Queiroz said on the sidelines of a mining conference.

"We analysed Zimbabwe's diamond potential with the Zimbabwean authorities and we are sure this is a market it is worth investing in... Catoca can invest in exploring and mining diamonds."

Zimbabwe has struggled to attract investors to its mining industry, despite mineral wealth that includes what could be some of the world's richest diamond mines.

A bar on Zimbabwean diamond exports was lifted in 2011 and confirmed in 2012 by the Kimberley Process initiative, set up to stem the flow of conflict diamonds, despite repeated charges of human rights abuses and smuggling at its diamond fields.

Angola's mining industry, dwarfed by booming oil, has long focused on diamonds, but the country is seeking to attract additional investment, not least with a major project to map the its mining potential, which is due to begin this year.

Queiroz said the final product, however, was still up to five years away. "It has to be trustworthy, so it has to be done with care. This is a medium-term process - three, four and up to five years."

The Democratic Republic of Congo and other African neighbours were mapped and studied under colonial rule, but a lack of investment from former colonial ruler Portugal and Angola's focus on oil has meant a far more limited understanding of its mining promise.

Queiroz said the country's new mining code offering lower taxes, the potential for tax exemptions in exchange for social efforts and no pre-established, free state stake was designed to attract investors.

Queiroz said that for strategic commodities like diamonds, gold and uranium, miners would have to partner with state companies, but these could hold minor shares.

"There is no minimum stake (for the state)," Queiroz said. "Sometimes, it could be a minority share which is also a 'golden share'... it is not necessary to have a majority to have an active say in a company.

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