Dispatch: Developing Angola's Diamond Industry

MIN READFeb 14, 2011 | 21:12 GMT

Analyst Mark Schroeder examines Angola's desire to develop its diamond industry and how possible cooperation with South Africa could ultimately usurp Angolan influence over the sector. Editor’s Note: Transcripts are generated using speech-recognition technology. Therefore, STRATFOR cannot guarantee their complete accuracy. The Angolan government is promoting fresh investment in its diamond sector. At the recently concluded international mining convention in South Africa last week the Angolan geology and mining minister stated that the diamond sector in Angola in the coming 15 to 20 years could rival its oil sector in output and value. The northeast region of Angola finds itself with the highest concentration of diamonds in the country but actually getting to this region is easier said than done. The road network to there is in poor shape. Now interestingly there are plans, however, to rehabilitate the roads on the Angolan side but on the other side of the border, South Africa has plans to actually build entirely new road infrastructure that will link up to this region in the coming years. The Development Bank of Southern Africa, which is a state-owned bank of South Africa, recently approved a loan of $262 million to the government of Zambia to build on an addition to what's called a north-south corridor, which is a road network that ultimately links the South African port of Durban with the Tanzanian port of Dar es Salaam. But this new extension that the South Africans approved will create a new road network in western Zambia, where there is little economic activity going on currently, but leading to Angola and could tap into the road network that the Angolans have proposed rehabilitating. Now what this road network will do is permit a decent overland supply chain into Angola's diamond-rich, northeastern region. In the short term, it makes full sense for the Angolans and the South Africans to cooperate in promoting this diamond sector in Angola. They each bring unique characteristics to the table. The Angolans need the financial and technical know-how from the South Africans, who are long players in diamond and other mineral mining operations in the entire southern African region. But in the long run, especially on the Angolan side, they must fear what this enhanced cooperation may do to their influence and control at home. And permitting the South Africans to develop not only the diamond sector but a robust supply chain network linking the diamond-rich region of northeastern Angola into the north-south corridor of South Africa, could lead to Angola losing control and influence over that region to the South Africans. The South Africans can just slowly deepen their influence over this very rich part of Angola that is the one prize the South Africans have not been able to entrench their control over.
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