Angola, which emerged from a protracted civil war in 2002 had been recording a constant economic growth as it reaped greatly from buoyant oil exports, and diamonds, but that was before the global financial crisis hit.

Of most concern the diamond market had been weak for the past year due to the global economic downturn; hence it had not been in a position to effectively prop up Angola’s economy.

State-owned Endiama controls all diamond concessions in Angola, which is the world's fifth largest producer of gems. The country produced 8.9 million carats valued at 1.21 billion USD last year.

Rough&Polished’s Angolan representative, Claudia Pereira filed questions to Endiama’s chief accountant Estevao Chitocota to find out how the company had been surviving in view of the crisis, and also look at their prospects for 2010.

Bellow is what she obtained: 

What is Endiama’s financial and operational highlight for the year 2009?

We are now busy with the final financial accounts and it is safe to say that despite the global economic downturn, we managed to conduct reasonable diamond sales as well as keep our workers, unlike some diamond companies that were forced to retrench their employees or even close down their operations as the crisis deepened. We remained on a strong operational position, and this I should say was a big highlight for us.

Are there any plans to increase the volume of output and the volume of rough diamond sales on the market in 2010?

The prospect of increasing depends on the price of the rough diamonds, if it goes down to similar levels witnessed when the crisis began then there is no need to increase production. However there has been a marked increase in demand for diamonds of late, so at Endiama, we have already started increasing our output and will continue to do so in 2010, the year we will start planning for the world diamond fair again.

What do you think about, whether or not, any measures are going to be taken in order to support demand for rough diamonds and curb speculative inflation which will result in a price drop?

Measures are and will be taken to insure that issues such as inflation and drop of prices do not affect us, and as I have said before, demand has been growing already. Measures are being taken to cater for that. You will witness progress next year.

What is the reason behind a recently higher demand for rough diamonds despite the almost flat polished market?

As you know most producing countries had stopped producing diamonds due to low demand and weak prices when the global economic crisis began. However, their clients are no longer with a negative mind, they have realised that even with the crisis they can still buy diamonds for future use.

Do you consider this trend to be long-term?

This will depend on how the crisis will continue, people have now realised that they can use diamonds as investments and not just as luxury goods, so if the crisis slows down then this trend will certainly be long-term, but if the inflation continues, then it will only be for short term purposes.

How do you evaluate the current prices for rough diamonds – are they fair?

The current diamond prices are quite high comparing to the same period the previous year, but then again, need I remind you that we do not buy diamonds ,we sell them, therefore , the higher the prices, the better for us. However, there is always one problem, if diamond prices are too high, then people will not buy our diamonds, but so far we are doing quite well in this regard.

Will it be correct to say that the crisis in the diamond industry is over?

Endiama was not greatly affected by the crisis like most companies, but I would say it is not quite over yet, it has the tendency to tune down but again it might just go up again, in this industry we cannot really be sure because one minute people value this thing and the next they will value something else. What we need to do is to be ready for whatever may happen, put mechanisms in place to deal with whatever may happen in this industry.

Claudia Pereira, Rough&Polished, from Angola