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The Luaxe diamond project has given rise to the Luele Mining Company, a company that has begun industrial diamond production at the Luele deposit. Five companies were invited to sign the investment contract to accelerate diamond exploration at the concession. However, there are more doubts than certainties regarding two of the shareholders, who are unknown to anyone.
This week, Angola inaugurated the country’s largest diamond mine, the third largest in the world, which until recently was known as Luaxe, amidst geopolitical uncertainties that have negatively affected diamond prices internationally. These uncertainties also extend to the shareholders themselves, as despite all the signals given over the years, the Russians from Alrosa, who are preparing to exit Angola, remain in the project only with indirect participation, and two new unknown shareholders have emerged.
The shareholder structure was changed and now includes five companies, namely, Sociedade Mineira de Catoca with 50.5%, Endiama with 25%, and the unknown Falcon with 19.5%, as well as Reform Morganstein, a company apparently linked to the Social Fund of the Angolan Armed Forces but whose Germanic name has raised many suspicions in the sector. Joining them is the Social Welfare Fund of the Workers of the Angolan Geological Institute (IGEO) with 1%.
Expansão sought to find out from various government members who these two companies are and to whom they belong, namely Falcon and Reform. After dozens of refusals and attempts to avoid the subject, a source involved in the process revealed that Falcon is actually Royal Falcon Capital, a joint-stock company based in Dubai, established in Angola on June 5, 2019.
Reform, according to the source, is a company registered in the Official Gazette under the name Reform-Morganstein – Service Provision S.A, established in 2019, but which increased its share capital in April 2021. According to the source, this company belongs to the Social Fund of the Angolan Armed Forces, information that Expansão could not confirm with various government members and MIREMPET contacts. In fact, several analysts question, anonymously, why the Social Fund of the FAA would enter the Luele Mining Company.
Discovered in 2013, the Luele kimberlite was an initiative of Endiama and Alrosa, with technical support from Sociedade Mineira de Catoca, which for the last seven years was designated as the Luaxe mining project. However, in March of this year, it gave way to the Luele Mining Company, changing the shareholders of the company. The revision of the shareholder structure and the consequent transfer of mining rights to the Luele Mining Company (SML) came after the former beneficiaries exceeded the deadline to realize the share capital that would give rise to the company.
Endiama and its subsidiaries, even with the departure of the former beneficiaries, ensured the continuation of the necessary work for the acceleration of the exploration of the Luele kimberlite, given its great potential, both in terms of contribution to diamond production goals and in terms of job creation and strengthening of social infrastructure. For its operationalization, the partners invested 635.3 million USD, of which 415 million were spent solely on mining. The treatment plant, considered the heart of the mine, cost 161 million, and geological studies cost 59.3 million.
Now that the shareholder structure issue is resolved, it can start to ‘yield’ tax revenues for the country. However, the scenario of low diamond prices worries experts, who do not yet know how long this period will last where precious stones will continue to be low in the international market. Not even this scenario has dissuaded the Angolan authorities, who are putting on the market a mine that in the last two years, still in an experimental state, produced more than five million carats of diamonds.
In fact, abroad, the expectation is that the opening of what is the largest mine put into production in the last ten years could further affect the diamond market, as it will put more precious stones up for sale, contributing to the fall in prices.
