well here can be a partial answer why the war is going
on and on and ... :
Angolan war seen boosting diamond giant De Beers
Reuters, Wednesday, March 03, 1999 at 08:12
By Steven Swindells
JOHANNESBURG, March 3 (Reuters) - Renewed war in Angola has
improved South African diamond giant De Beers' bottom line as
supplies from the southern African state are disrupted and
prices pushed higher, diamond analysts said on Wednesday.
De Beers, which controls 70 percent of the world's diamond
market by regulating sales through its Central Selling
Organisation (CSO), has earned $800 million in two sales so far
this year, a 33 percent increase over 1998 levels.
Analysts forecast the CSO was on course to earn $3.7 billion
from diamond sales this year -- up 10 percent up from 1997 --
allowing De Beers to recover from a poor performance in 1998
when Asia's economic downturn bit heavily into profits.
Analysts said the diamond price was being pushed higher
because of reduced supplies from Angola where fresh fighting
erupted on December 5 between the government and UNITA rebels,
shattering a 1994 peace accord.
Prospects for a negotiated peace are slim and the United
Nations Security Council has ordered its remaining 1,000
peacekeepers to leave the country by March 20.
"De Beers has been fortuitous because of the conflict in
Angola. There's been a radical decline in sales out of Angola,"
said analyst James Allan at Barnard, Jacobs, Mellet and Co.
De Beers shares were up 2.8 rand or 2.64 percent at 109 rand
at 1250 GMT on Wednesday.
Fears of UNITA attacks has led some foreign concessions to
halt operations while the outbreak of full blown war has halted
many civil engineering projects needed to exploit the river beds
where Angolan's alluvial diamonds rest.
Foreign companies have been uneasy in the former Portuguese
colony since November when gunmen attacked the Canadian Diamond
Work's (TSE:DMW) operated Yetwene mine, killing eight workers and
kidnapping 10 employees who remain missing.
The attack is believed to have been carried out by UNITA.
Toronto-based SouthernEra Resources (TSE:SUF) shutdown its
Luo and Cassanguidi concessions in the diamond-rich northeastern
province of Luanda Norte in Janaury because of fighting.
Previous rounds of fighting between Angola and UNITA, the
National Union for the Total Independence of Angola, had seen
increased Angolan diamond supplies on world markets as UNITA
used diamonds from its territory to fund its forces.
But the renewed violence has seen a different pattern with
supplies falling, providing a boost to world prices already
helped by an upturn in jewellery demand in Asia and other supply
disruptions from Russia and other African producers.
"When it comes to the Antwerp trading market we're told
there are less Angolan diamonds appearing on the market...UNITA
has taken its eye off the mining ball and focused on the running
of the war," said Hilton Ashton at B.O.E. Securities.
UNITA was using financial reserves built up over the last
five years to fuel its war machine, analysts said.
British-based human rights group Global Witness put UNITA's
earnings from illicit diamond sales at $3.7 billion between 1992
and 1998, enough to re-equip for further fighting.
"All the indications are that there are a lot less diamonds
coming out of Angola. Any escalation in the war can be good for
De Beers," said Keith Bright at Fedsure Asset Management.
Diamond analysts estimate that $600-700 million worth of
diamonds are produced each year, of which UNITA mines just under
half. The Angolan government says diamond output rose to 2.764
million carats in 1998, worth $431.9 million.
Copyright 1999, Reuters News Service
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