Angola to Pass Law to Regulate Diamond Sector

Jose Eduardo Dos Santos, Republic of Angola President. The head-of-state of this oil-rich nation has announced that national elections will be postponed.
Originally uploaded by Pan-African News Wire Photo File

Angola to pass new law to regulate diamond sector

Angola, the world's fifth-biggest diamond producer, is working on a new law for the mining sector that will regulate the way diamond companies will distribute their revenues from projects in the African nation, an official from state-run diamond company Endiama said.

Under the new law, diamond companies will use 50 percent of their revenues to pay for operational costs. The remaining 50 percent will be used to pay taxes, investors and to help develop the local community, the official, Sebastiao Panzo, said.

He gave no further details.

The current law stipulates that mining companies in Angola pay 35 percent of their profits in taxes to Endiama but it does not stipulate how firms should distribute their revenues.

"The goal is to make the mining sector more attractive for investors and also contribute to the development of local communities," Panzo said. The law would come into force in coming months, he added.

Most of Angola's diamond mines are in the poverty-stricken northeastern provinces of Lunda Norte and Lunda Sul.

The new law would be tested on a contract between Trans Hex Group, Africa's biggest traded diamond producer, and Endiama that was signed in May, Angola's Industry and Mining Minister Joaquim David was quoted by Jornal de Angola as saying.

Angola emerged from a civil war in 2002 to become one of the world's biggest diamond exporters due to multi-million dollar investments from companies like De Beers, the world's biggest diamond producer, and Russia's Alrosa.

The country's diamond industry was hit hard last year after the global financial crisis sapped demand for the gems but has slowly recovered as diamond prices rise, David said.

"We are absolutely convinced that if during the war there was enough capacity to produce diamonds, the government now has the capacity to duplicate diamond production in times of peace," the state-owned newspaper quoted David as saying on Tuesday.

David has urged mining companies to diversify their mining operations into other minerals such as gold. - Reuters

Published on the web by Business Report on June 8, 2010.