António Carlos Sumbula

«Diamonds will never compete with oil»

\\ Text Maria Cruz
\\ Photography Photo Atelier ©Walter Fernandes

In September 1954, the village of Muxima-Demba-Chio, in the province of Bengo, welcomed a new being. He grew up. António Carlos Sumbula turned into a wise man. A rough diamond, who, over the years, ?polished? himself, making his story shine. He completed a degree in mining engineering, majoring in oil, at the Agostinho Neto University. Then he specialised in oil management at the French Petroleum Institute (IFP). And he did not stop there. He continued training in well management, drilling and production in Brazil. In the meantime, he also wanted to make his own contribution, teaching Portuguese and Mathematics at Maristas do Cristo Rei school. He has worked for Sonangol, Petrobras, Elf, and he was Deputy Minister for Geology and Mines. Among other positions, he has become the president of the board of directors at Endiama, where now, amidst diamonds, his eyes sparkle when he speaks to us about diamonds. That's how we see him during this interview. 

Endiama's core business, ever since its early days back to the 19th century, has been linked to the prospecting, exploration, and sale of diamonds. What is the general picture of the diamond industry currently?

With regard to prospecting activities, we see the possibility of discovering new alluvial reserves as well as kimberlites. There is, for example, the discovery of Luaxe, which is probably the third largest kimberlite in the world. It is bigger than Catoca (fourth largest in the world). Now we need to determine prospecting in order to see, if this kimberlite is the third, second or if it's the first in the world. In February 2015, we started polishing on a small scale.

 

With prospecting underway, is it already possible to name dates regarding the exploration proper of the Luaxe kimberlite?

During this year, as well as in 2017, we will mobilise investments. Then, in 2018, we will start production. In alluvial terms, and with regard to the new discovery, we have discovered Tchegi, a small mine in Lunda Sul. Here we also discovered Lulo, another alluvial mine. As for polishing, we are polishing in small quantities, firstly because it is our first experience and we have to train our staff with quality, and then polishing a diamond is a very sensitive activity, which requires enormous care. It is important to note that polished diamonds are classified as excellent, good and sufficient. And we, although we only polish small amounts, have excellent results.

 

So, is it to be expected, with the discovery of the new kimberlite, that the economy in this sector will grow in the coming years?

Yes. With the proviso that, when it comes to diamonds, it is not enough to just produce more, we must also keep a close eye on the international market. When supply is too high the price drops. We have to play in order to achieve the maximum price on the market. This is only possible if we cooperate with other diamond producers worldwide. I'm talking about Alrosa, Rio Tinto and De Beers. There has to be a balance. Consumers of diamonds never change; what can change now is the quality of diamond that can enter the market. During the 2008 crisis, we have had a similar phenomenon, the amount of diamonds on the market increased and consequently demand decreased, and hence the low price. We are now in the diamond crisis, but the first thing we did was to agree with the other producers the amount of diamonds that should enter the market. We are all ensuring damage limitation. However, Endiama produces the same amount, but stocks them here, in Luanda.

«In the next three years we are going to double diamond production »

Even increasing production won't raise profits. So, is it wrong to think that with the current financial downturn and the price of oil dropping, attention might pass to the diamond sector?

Exactly. Settling things with other producers on a world level, we can admit to increasing our production a little, as happened last year. Alrosa places about five billion USD/year on the market, Endiama about 1.2 billion. Due to the crisis we are going through, this is the kind of negotiation we are going to keep up. No matter how much we increase our production, or optimise placing our diamonds on the market, diamonds will never compete with oil.

   

Not least because oil is accessible to everyone and diamonds to the few?

If we were to do the maths, in oil we produce about a million and a half barrels a day and, if we multiply this, for example, by 30 USD, this makes many billion dollars a year. While at the same time, Endiama, we make 1.2 billion per year. Even if we double our production, which is our desire with the new discovery of Luaxe, and everything points to doubling diamond production within the next three years, we will remain small in comparison to oil companies.

 

How can the diamond sector promote more investment for Angola? Is it a viable market for other investors to commit to?

Anyone investing in Angola begins with prospecting. It is true that we have areas to work on. The Angolan territory, until very recently, was only 40% known in terms of geology. Now, the Government has decided to do geomagnetic surveys, which basically is a kind of x-ray of the subsoil, to spot anomalies. With this, we have areas to welcome more investors to prospect mineral resources. Yes, investors should come, and Angola's potential is large. When we look at world geography, such as Russia, Canada, Australia, South Africa, Botswana, Namibia, the quality of diamond reserves has decreased. While, in Angola, the quantity of diamond reserves is rising, and so Angola is the place investors should turn to at the moment.

Not least because, following the 2013/2017 development plan, the forecast is a significant increase in production.

There was talk of 10 million, but we had to correct this. At the time, De Beers was prospecting diamonds and was getting good signs in a region called Mulepi, and at the time, his Excellency, the President José Eduardo dos Santos, thought that we could already think in terms of a quantity of ten million carats, when at the moment we are producing eight million. But the discovery proved, shall we say, not to be of sufficient importance and not economically viable. What will ensure that we double national production is the discovery of Luaxe.

 

The goal is to double production, so does Endiama have a lot to do?

Exactly. Our function now is to negotiate with other producers so as to bring this part of production onto the market.

 

Angola is fourth in the world when it comes to diamond production, what is required to make it to first place?

This is a matter of nature and of the discoveries made until now. It is already very good that we are fourth. It is a question, on the one hand, of nature, which gives us the kimberlites and, on the other, of the acumen of prospectors in discovering them. There are countries that have nothing today, but it could happen that in the future they discover economically viable reserves, which lift them to 1st, 2nd or 3rd place in the world.

 

With the focus this year on prospecting Luaxe and on the production of millions of carats, what can we expect in 2016?

This year we want to negotiate with other producers to ensure that, when Luaxe is producing, a market is there without the price dropping. We are here to work and we have invited investors to help us ensure that, in addition to Luaxe, more kimberlites are found.

«Angola is the place investors should turn to at the moment »

Endima is also very involved in the social area, with the realisation of social projects, the creation of schools, etc. Why this concern?

We have already set up schools in many provinces, such as Bié, another for agricultural studies, in Lunda Norte, and at the moment we are making another in cooperation with the local Government and the Catholic Church. In Lunda Sul, we are building four thousand houses for the workers in Catoca. In addition to this, we have helped during natural disasters, such as, for example, the floods that took place in January, in the Kissama region. We have already built a clinic on the island and another in Talatona, fitted with quality medicine and doctors, where many treatments and tests can be done. We have already put branches in ten provinces, but we want to reach them all.

 

How does Angola act in an advisory role for the diamond sector for the world?

The process of diamond certification was created by our President of the Republic. The international committee has implemented this certification internationally. Annually, there is a country presiding over the Kimberly Process and there is another co-presiding. In Angola, despite having being the strategists, the fact that we had been part of the problem meant that we never presided over this Kimberly Process. The first to do so was South Africa, then Russia, then the USA, Democratic Congo, until Angola was accepted to preside over the Kimberly Process in 2015. We had been vice-president in 2014. When Angola took on the presidency, last year, it explained to the members of the Kimberly Process that what was happening in the South African population was against the principles that led to the creation of the Kimberly Process. With this, the international community, asks us to help other countries that are in difficulty, such as, for example, Venezuela. Call us what you will, advisors, who knows, but we are definitely something (he laughs). 

Diamond circuit:

 

To talk about the diamond circuit we have to make some reference to the history of Angola. The story goes that diamonds have already been used to buy weapons and promote wars. There were rebels in Angola, in the Democratic Congo, in Liberia, in Sierra Leone, who were extracting alluvial diamonds, selling them, and using this money to buy weapons and to fight against the governments. To avoid this, there was the so-called battle of Cuito Cuanavale, in the region of Cuando Cubango, in which the Apartheid army, which planned to occupy Angola, was defeated. His Excellency, the President of the Republic of Angola presented three conditions to the Apartheid forces: the first condition involved signing an agreement that determined that the Apartheid forces would no longer invade Angola; the second was that Apartheid should be banned and that his Excellency, President Nelson Mandela should be freed; and the final condition was that Namibia, which served as a springboard for the forces of Apartheid to attack Angola, should become an independent state. Then, with these three conditions inside Angola, it was expected that UNITA would sign this peace accord. But this didn't happen. The forces of UNITA lost the support of Apartheid, they no longer had Namibia as a springboard country, and they started to mine for diamonds in the country, obtaining more money than they had had up to the point. So, there was no peace agreement, and the problem was twice what it had been before. How could it be resolved? His Excellency the President of the Republic of Angola decided, through foreign affairs, to convince the world, to which they sold diamonds, that diamonds would continue to come out of the country, but accompanied by a certificate of origin. In this way, no rebel would forge one, and any diamonds reaching Belgium or Tel Aviv without the certificate would be seized as they would have been brought their by rebels. This phenomenon, of the rebels, was also taking place in the Democratic Congo, in Liberia and in Sierra Leone. It was a problem of the United Nations. And so the United Nations sent Ambassador Robert Fowler, a Canadian, to Angola, with the proposal of banning countries that had the problem of blood diamonds. Diamonds leaving Angola were certified. Robert Fowler reported this idea to the United Nations and, in this way, transformed this certificate into an international document, removing blood diamonds from the entire planet. At this moment, the wars came to an end, but now the process only exists to prevent the appearance of others. 

Alluvial diamonds: are diamonds that break away from their origin, as normally diamonds are found in magma coming up from below the earth's crust, millions of years ago, which has solidified in kimberlite pipes. Over thousands of years of erosion, rivers winding along their circuitous paths pass over these kimberlites, taking diamonds with them, and depositing them as alluvial diamonds throughout Angola and all the way to the sea. Both Diamang and Endiama, for a hundred years, only mined alluvial deposits. It was with scientific knowhow that Ediama and Alrosa, in 2011 and 2012, went in search of the origin of these alluvial diamonds. And it is interesting to note that when you measure the beta ray of diamonds from the same kimberlite, this ray never changes.

 Kimberlite Diamond: When you take a kimberlite, for example from the Sanga mine, and measure its beta ray, this beta ray is different to that of the Catoca mine, or in other words, every kimberlite has its own DNA. If you take diamonds found throughout Angola, in Malange, Lunda Norte, Lunda Sul, Moxico, Cunene, Bié, and study their DNA, you can see from which kimberlite this diamond came from. For example, if the diamond has the same beta ray, from the left side, the same as that of Catoca, it means that this diamond came from Catoca. Following such measurement, we come to the conclusion that only 10% of alluvial diamonds come from known zones. Ediama and Alrosa started a study, close to Catoca, searching above and below, and to the sides, and travelled 25 kilometres from Catoca, before finding Luaxe. But now, the number of known kimberlites has grown. Maybe the conclusion will be reached that 80% of alluvial diamonds have come from Luaxe, seeing as it is crossed by a river. 

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