Angolan diamond firm to begin production at Tchegi alluvial site in May

Angolan company, Escom Investimentos e Participaccoes SA, plans to start producing diamonds from a deposit in the country in May, said company President Helder Bataglia.

The Tchegi alluvial site will produce, together with Escom’s existing Luo kimberlite mine, a total of around 35,000 carats a month by the end of this year, Bataglia said.

Tchegi is one of two new sites found to be commercially viable by the company in the Lunda North province, about 850 kilometers east of Luanda, the capital. Escom and former partner, BHP Billiton, invested US$200 million over a period of eight years prospecting 14 concessions, he said.

“By next year we hope to arrive at normal production in Tchegi,” Bataglia says in comments to Bloomberg. “Our aim is kimberlite mining where the stones are heavier, but we have alluvial projects because the quality in that area is very good.”

Escom and partner Endiama EP, the state-owned diamond company, also intend to expand mining at the US$300 million Luo site after appraising three new kimberlites. A feasibility study is expected by March 2014, Bataglia said.

“We won’t do anything without at least 120 million tons in reserves, but I think we have a little bit more than that,” Bataglia says, adding that reports on the other viable alluvial concession, Itengo, should be ready by December.

BHP Billiton withdrew from Escom’s prospecting phase three years ago, while Russian diamond miner Alrosa pulled out of the Luo project in 2011, Bataglia said.

The Angolan government has since overhauled its mining code, simplifying regulations, reducing the government’s minimum stake in future projects to 10 percent, and cutting taxes on the sector to 25 percent from 35 percent.

Angola is the fifth-largest diamond producer in the world, and sold 8.33 million carats valued at $1.16 billion in 2011, according to the Kimberley Process.