(Bloomberg) -- Angola’s state-owned diamond producer said some clients were deterred by its partnership with Russia’s Alrosa PJSC, but underlined that its output doesn’t fall under western sanctions.
Russian diamond giant Alrosa holds a 41% stake in Angola’s Catoca operation, which also owns just over half of the Luele mine. The southern African nation’s Endiama Mining SA owns a majority of both the mines and has made management changes to shore up its control, according to Chief Executive Officer José Ganga Júnior.
“The diamonds we have in Angola are ours,” Ganga Júnior said in an interview in the country’s capital Luanda.
However, Angola “occasionally encounters difficulties” with clients in certain markets because of Alrosa’s stake in the mines, the CEO said. Ganga Júnior declined to say whether Angola was under pressure to oust Alrosa from Catoca. “Alrosa has no interference in Angola’s operations,” he said.
Group of Seven nations agreed to ban Russian diamond imports from the start of this year to curb the Kremlin’s ability to fund its invasion of Ukraine. The ban initially covered all imports of rough diamonds directly from Russia, but was extended from March to include stones processed in third countries. Alrosa is also sanctioned by the US and European Union.
To comply with G-7 sanctions, Endiama must set up a system to track and identify the diamonds that originate in its mines, Ganga Júnior said.
A diamond’s origin is clear at the start of the supply chain when it is issued a certificate under the Kimberley Process, which was designed to end the sale of so-called blood diamonds that financed wars. But after that, the stones can become difficult to track.
Alrosa helped establish both the Catoca and Luele mines, and still receives revenue from both operations. However, those funds are held in Angola and can’t currently be repatriated to Russia.
Russia said earlier this year that Alrosa may sell its Angolan interests as its partners believe the investment is preventing Catoca’s development, according to Interfax.
In May, Angola’s Minerals and Petroleum Minister Diamantino Azevedo said the country’s long-time partnership with Alrosa had become “toxic.”
Russia’s state-controlled Alrosa vies with Anglo American Plc’s De Beers as the world’s biggest diamond producer.
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