Angolan state-owned diamond firm Endiama will increase production by about 10 percent to 10.5 million carats in 2009, boosted by new discoveries and demand from India and China, a company official said on Wednesday.

Right now we are extracting about 9.7 million carats a year, which resulted in $1.3 billion in revenues in 2007, and we can comfortably say we will reach 10.5 million carats by 2009, Sebastiao Panzo, Endiama's marketing director, told Reuters in an interview.

Panzo added that Endiama, which controls 14 diamond mines in the southwestern African nation, was looking for partners to explore for new deposits. Angola is Africa's third largest diamond producer and the world's fifth biggest in terms of value

Angola's diamond industry has been growing at a fast clip since a 27-year civil war ended in 2002.

There is huge potential for diamond mining in Angola. That is why we want to attract more partners to extract diamonds and satisfy strong demand from countries like India and China, Panzo said.

Some of the revenues from the sale of diamonds, which once helped fund the war between the government and the UNITA rebel movement, are being used to fund Endiama's expansion and exploration programme.


The lion's share of Angola's diamond production comes from alluvial deposits -- stones found in and around rivers -- but Endiama has high hopes for major discoveries of gems in shafts of volcanic rock, known as kimberlites.

South African mining firm De Beers, 45-percent owned by Anglo American (AAL.L: Quote, Profile, Research) (AGLJ.J: Quote, Profile, Research) has invested in such a concession in Angola's northeastern region. Other foreign firms have also expressed interest in exploration there.

But kimberlite exploration and mining is a time-consuming and expensive undertaking that has forced Endiama to partner with companies such as De Beers and BHP Billiton (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research), who have provided financial and technical assistance.

Russia's Alrosa also has a partnership with Endiama.

We want to be one of the most active countries in diamond mining, Panzo said.

Poor infrastructure -- Angola's roads, ports and rail links were destroyed or neglected during the war -- remain a barrier to a diamond exploration boom in the country, as does the threat of political instability.

Angola will hold parliamentary elections on Sept. 5, the first nationwide poll since the catastrophic 1992 presidential election. That poll was aborted after the first round and led to the resumption of the war, killing more than one million people.

Panzo dismissed fears that the election could destabilise the country and damage diamond exploration and production.

There is only one army now in Angola and, therefore, there is little or no risk of war, said Panzo, who added that Endiama was considering listing its sales and distribution arm, Sodiam, when the Luanda Stock Exchange opened.

The exchange is expected to start up later this year. (Editing by Paul Simao and David Evans)

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