The Angolan state diamond company Endiama increased its stake in Sociedade Mineira de Catoca, making it the majority owner of the miner, which produces about 75% of all the diamonds mined in the southern African country.
“The attorney general's Office of the Republic of Angola blocked LLI’s participation in Catoca in 2021 and transferred control of this 18% stake to the state body IGAPE,” Catoca said in a statement seen by The Financial Times. “Therefore, Angola holds 59% of the shares in Catoca.”
IGAPE manages Luanda’s shares in companies, while LLI International is a unit of China Sonangol.
Russia’s ALROSA owns the remaining 41% stake.
So why was the Chinese investor blocked from participating in Catoca?
Catoca and the office of the Angolan attorney-general refused to answer media questions about why the LLI stake was seized.
However, The Financial Times quoted the Africa programme director at Chatham House and an Angola expert, Alex Vines, as saying that Angola took over the 18% to reassure investors that they are cleaning up the sector and show its efforts to end ties with China Sonangol.
“China Sonangol was linked to [Angola’s] ancient regime” [and has fallen from favour under president João Lourenço],” he said.
China Sonangol was part of the Queensway Group of companies, formerly centred on Sam Pa, a Chinese business mogul who signed deals with authoritarian African governments.
The election of Lourenço as Angola’s new president in September 2017 after almost four decades of now late Jose Eduardo dos Santos’ rule brought so much hope to the southern African country.
Lourenço, who is seeking to be re-elected this month, promised to tackle family monopolies and make Angola more attractive to investors when he first came into power.
It is, therefore, not surprising that his government went after LLI considering its alleged association with Pa.
China Sonangol denied any current relationship with Pa, whose whereabouts are unknown.
He was arrested in Beijing in 2015 in a corruption investigation.
It is challenging Luanda’s move to seize its stake in the diamond company.
“As we have appointed Angolan counsel to represent us in this matter and this matter is before the Angolan courts, we are unable to comment further on this,” The Financial Times quoted China Sonangol as saying.
This is not the first time that Luanda had been reversing decisions made by Dos Santos’ administration.
In December 2017, Lourenço’s government pulled state-owned diamond company Sodiam from an investment in Geneva-based jewellery maker De Grisogono controlled by the late Sindika Dokolo, who was married to Isabel dos Santos, the eldest child of Angola's former President José Eduardo dos Santos.
Sodiam cancelled its ties with De Grisogono for “reasons of public interest and legality”.
In 2018, Endiama also suspended its exploration and mining projects in the Central African Republic (CAR) and Venezuela to focus on the exploration and mining of new diamond reserves in Angola.
Again in 2018, Isabel lost diamond exploration licenses previously reserved for her to investors.
She previously held the Camafuca-Camazambo and Chiri licenses.
Endiama president José Manuel Ganga Júnior said in February 2018 that the licenses had expired and were now available for new exploration partners.
The Angolan government also approved a new policy of rough diamonds trading in June 2018, which would guarantee an effective system.
Diamond producers like Catoca are now allowed to sell up to 60% of their output to companies of their choice, as well as to their trading divisions, breaking Sodiam’s power to select buyers.
De Beers said last December that it had applied to conduct exploration activities in north-eastern Angola following substantive and consistent reforms implemented by the government of Angola.
The diamond giant previously had a residual presence in Angola since 2014 after its prospecting licences for the Mulepe-1 kimberlite cluster expired in 2012.
Should the diamond giant succeed with its exploration licence application, Angola would be the only major diamond-producing nation where ALROSA, Rio Tinto and De Beers have a presence.
This would have been impossible if Angola had not cleaned its image.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
