Lucapa Predicts Premium from Angola Reforms

RAPAPORT... Angola will this month host its first diamond sale under newrules designed to improved transparency and prices.Sodiam, a state-owned diamond-marketing company, will offerseven large stones from Lucapa Diamond Company's Lulo mine, including a46-carat pink and six white diamonds ranging from 43 to 114 carats. The Angolan government approved reforms last year that willopen sales to a wider range of buyers, Lucapa CEO Stephen Wetherall explainedto Rapaport News Monday. While previously miners had to sell theirdiamonds to a list of buyers Sodiam selected, the new regulations allowcompanies such as Lucapa to offer 60% of their production to clients of theirchoice. "By needing to sell to one of [Sodiam's] buyers, eventuallythere was no competition on the product itself, and therefore the prices werenot [in line with the] market," Wetherall said. Rough is likely to fetch"considerably more" under the new system, the executive noted. Catoca, the country's largest diamond mine, lost $464million over six years because of the unfavorable marketing rules, Reutersreported in June, citing an internal Catoca document. Between 20 and 30 diamond companies from New York, Antwerp,Israel, Hong Kong and other locations will attend the tender in Luanda, theAngolan capital, which ends January 31. They will bid online for the goods,ensuring the sale meets the industry's transparency standards, Wetherall said. "[This] is a unique moment of great importance that marksthe turning point in the trading of diamonds in our country, reflecting greaterflexibility and transparency in this sensitive and vital industry for oureconomy," said Diamantino Azevedo, Angola's minister of mineral resources andpetroleum. The rules state that producers may sell through long-termsupply contracts or spot auctions. Lucapa also received special permission tohold tenders under the new regulations straight away, even though the governmentisn't expected to codify the new rules into law until later this month. Angola's rough-diamond production grew 4.6% to 9.4 millioncarats in 2017, according to data from the Kimberley Process.Image: The 46-carat pink diamond. (Lucapa Diamond Company)