In a bold move despite the current challenges facing the diamond industry, Angola has officially commenced diamond mining at its monumental Luele project, marking a significant milestone for the country and adding to the world’s biggest diamond resources. The announcement comes when the global demand for diamonds faces a downturn.
The diamond sector has experienced diminished demand for diamond jewellery due to high-interest rates in the US, which accounts for 55 percent of global demand. Additionally, a lacklustre post-pandemic recovery in China and the rise of lab-grown diamonds have intensified the competitive landscape.
Angola’s state-controlled diamond miner, Catoca, discovered the Luele diamond deposit in 2013 at the project, previously known as Luaxe. This discovery ranks as one of the largest in the diamond industry in over 50 years.
Independent diamond analyst Paul Zimnisky emphasised the significance of the Angola Luele project, stating, “This is the only major new diamond mine in the world that will commence production this decade.”
Catoca Diamond Mine Angola
The Luele project boasts estimated resources of 628 million carats of diamonds, with a projected operational lifespan of 60 years, according to the project’s presentation seen by Reuters.
While the presentation did not disclose production plans for 2024, the project has already mined five million carats of diamonds during its pilot stage. The project’s plant has an initial annual processing capacity of 4 million metric tons of ore, with plans for a gradual increase to 12 million tons in the coming years.
Despite the challenging timing for the industry, the $600 million Luele project could provide a much-needed boost to Angola’s economy, potentially attracting additional budget proceeds. The country has been contending with high inflation, and the revenue generated from the diamond project could support future investments.
Diamond industry consultant Richard Chetwode acknowledged the challenging circumstances, noting, “You can’t delay opening a mine, but I think it’s opening at a terrible time for diamonds.”
Catoca, with 41 percent ownership by Russia’s sanctions-hit Alrosa, holds a 50.5 percent stake in the Luele project. Although Alrosa’s geologists played a crucial role in the discovery of the diamond deposit, the company did not secure a direct stake in the project. The project’s success could contribute significantly to Angola’s position as the most prospective nation for diamonds, according to Zimnisky.