José Manuel Ganga Junior,
Chairman and CEO,
"Our aim is to own mines in the future where we participate in more aspects of the diamond supply chain."

What are the current projects ENDIAMA is working on?

ENDIAMA is currently taking part in 13 production projects, three of which are primary deposits – kimberlites, while the remaining 10 are alluvial secondary deposits. Our production capacity stands at 10,000,000 carats per year, where primary deposits represent 90%. On the other hand, ENDIAMA has 25 projects at the exploration phase, eight of which are primary and 17 are secondary/alluvial deposits. By 2022, ENDIAMA will have a production capacity of 14 million carats after the restructuring process is complete.

To what extent has the Angolan economy diversified away from oil and facilitated the rise of the mining industry?

Angola is an oil-based economy. The diamond mining industry is, however, the second largest source of government revenue. The Angolan government is attempting to restructure the economy to reduce its reliance on oil, firstly by developing nation-wide infrastructure such as road networks, power generation infrastructure and airports. To attract investment into other sectors such as mining, financial incentives are being put in place such as reduced taxation. For example, the industrial tax rate was reduced from 35% to 25%. In addition, Angola has a competitive royalty rate of 5%, which is the lowest in comparison to other mining destinations.

Meanwhile, the regulatory framework is also becoming more flexible, especially with the introduction of the new trading policy, which aims to increase transparency in the diamond sector.

In addition to diamond, what other metals has the government prioritised in terms of exploration?

Angola is rich in mineral resources. Currently, an iron ore project has been approved that will go from exploration to the processing stage by beginning of 2022. In 2019, Angola welcomed its first gold project and other mineral projects will follow. A copper project is also under discussion so that copper can be mined and processed in–country. Meanwhile, mining of rare earth metals and phosphates is also being promoted.

The Angolan economy suffered the dual shock of collapsing oil prices and the Covid-19 outbreak, which significantly reduced diamond demand. When do you foresee the industry and the economy recovering?

The pandemic had a significant impact on the Angolan economy that resonated to most industries. The national budget was set based on an oil price of US$50-60, therefore, when the price per barrel fell to US$20, the budget had to be re-evaluated. As for diamonds, there was no demand from the major markets such as India, the US and China. Our on-going projects therefore reduced their volume of production, ensuring a reduction in their operating costs compatible with the forecasted reduction in their revenues, in order to preserve projects economic breakeven point while complying with health and safety procedures.

Prices have slightly recovered since the start of the outbreak as confidence in the market has increased. The Angolan government continues to attempt to reduce its economic dependency on oil by also focussing on the agricultural industry.

How will ENDIAMA’s IPO, in 2022, increase transparency in the sector?

The country has intentionally shifted to a policy of privatization in the last few years. By 2022, 30% of ENDIAMA’s shares will be listed on the stock exchange, but let me emphasize that this is a journey. Therefore, we are undergoing a restructuring process to focus solely on diamond production as opposed to other activities we undertake in the health, hospitality and logistics sectors. Our aim is to own mines in the future where we participate in more aspects of the diamond supply chain. In addition, a larger set of documents and information related to the company's internal operations will have to be released to the public. Therefore, the company’s financial records are being kept up to date to provide future shareholders with a transparent and clear framework of ENDIAMA’s operations.

How is ENDIAMA engaging with the communities surrounding its sites?

Our communities are crucial to our operations and business strategy. Unfortunately, we come across poverty and social issues in all the locations where we operate. To address this issue, multiple strategies are implemented. One is starting small projects that are of a semi-industrial nature to provide more jobs to members of the community. Another is to promote entrepreneurship in local communities to improve their economic well-being. Additionally, the program also aids in the development of agricultural projects. Contributions from all the mining companies finance these projects. ENDIAMA also created a foundation known as

“Fundação Brilhante” in collaboration with the government of the provinces we operate in. This dialogue between the government, communities and the mining companies will foster economic and social development that does not disregard or ignore the communities.

How does semi-industrial and artisanal affect mining?

In effect, our semi-industrial activity has little weight in terms of the total volume of carats produced annually. However, there is a social and economic inclusion aspect concerning the local communities where we operate which we believe must be taken into account. For this reason, perhaps the best way forward is to invest in greater formalization and reorganization of this subsector, which is precisely what we have been doing. Furthermore, the responsibility for overseeing the semi-industrial diamond production activities will no longer be with ENDIAMA, but instead will pass into the sphere of the newly created National Mineral Resources Agency.