As peace comes to Angola, so do the diamond chasers

CAMISSOMBO, Angola -- It could be just another hill in Africa.

Or, under hundreds of feet of soil and sand, it could contain one of the richest veins of diamonds ever discovered.

''I think Angola will be the future of diamonds in Africa and the world," Charles Skinner of the De Beers diamonds conglomerate said as he looked at the flat-topped hill in front of his team of 20 workers. ''This hill could be a big part of that."

Northeastern Angola is part of a new rush for precious minerals taking place all over Africa, from Ghana to South Africa. Mining conglomerates and hundreds of thousands of African fortune-seekers have poured into Angola and the southern part of the Democratic Republic of Congo in the last year, capitalizing on opportunities brought by peace.

The price of minerals has something to do with the excitement. Gold rose to its highest level in a quarter-century last month, peaking at $567 an ounce; and an ounce of platinum now fetches more than $1,000.

But the high hopes are also because of untapped potential, such as De Beers's stake in the Camissombo hill.

''The mineral wealth in Africa is unparalleled in the rest of world," said Alex Gorbansky, managing director of Frontier Strategy Group, a Cambridge-based consultancy that analyzes risks for natural resources industries around the world. ''Many, many mineral belts have yet to be explored and exploited by the industry."

Gorbansky, in a telephone interview last week from Accra, Ghana, also said many investors now see Africa as a safer bet than other areas. He said political uncertainties from recent elections in Latin America and a difficult regulatory environment in Russia are scaring off many companies.

Even in Africa's riskiest environments, such as the Democratic Republic of Congo, many companies are gearing up to start operations, he said, adding: ''The Congo has the potential in mining to be what Saudi Arabia is in oil. And in Angola, there's a very, very strong geological potential for diamonds."

Angola is now the world's fifth-largest producer of diamonds, and the diamond giant De Beers has spent several million dollars in recent months trying to find the right places to drill for the precious gem.

Using two low-flying aircraft, De Beers is systematically mapping an 1,860-square-mile area with cameras that have taken tens of thousands of electromagnetic images of rock formations deep beneath the earth's surface. If the images reveal a promising formation that could contain kimberlite, the company then might send in huge earth-moving equipment to take samples. Kimberlites are rare mixtures of different types of rocks from the earth's mantle that have been pushed toward the surface by volcanic activity. Diamonds are often embedded in kimberlite.

''Angola is totally virgin territory," Skinner said. ''Maps were not done for the last 30 years. All the technology that was developed during that time hasn't been used here." On this hill north of the village of Camissombo -- 500 miles east of the capital Luanda and 50 miles south of the Congo border -- De Beers's planes identified rock formations that company analysts believe could be kimberlites. Skinner and other De Beers officials aren't hiding the location of the potential source of the gems because the potential kimberlites are several hundred feet below the ground and can only be dug out with special drills.

De Beers may drill at a few other sites later this year.

And yet, it's still a surprise to see De Beers operating in Angola at all. The company and the government had to work painstakingly to rebuild a relationship that had all but collapsed during the civil war.

Just before the end of the nearly three-decade war in 2002, De Beers's relationship with the government had deteriorated to the extent that the company stopped exploration. The government accused the company of fueling the war with the rebel UNITA movement because De Beers purchased large quantities of UNITA's diamonds in Europe. The rebel group used the proceeds to buy weapons.

De Beers argued that it purchased the diamonds only to make sure UNITA's diamonds, coming out in large batches, wouldn't hurt the market price.

The flow of diamonds from war zones -- mostly in Africa -- in the 1990s led to the Kimberley Process, a voluntary system that certifies that diamonds do not come from conflict areas. De Beers has signed on to the initiative, and the issue with Angola faded with the end of the civil war in 2002.

Still, negotiations between the government and the company went nowhere for a couple of years. Angolan President Jose Eduardo dos Santos demanded that De Beers apologize for working with UNITA as well as drop its claim for repayment of a $50 million loan to the government, senior negotiators for both sides said in interviews, revealing details for the first time publicly. In exchange, the government would drop a lawsuit against De Beers calling for $5 billion in damages.

De Beers managing director Gary Ralfe didn't want to lose the $50 million and didn't want the government to use an apology against De Beers in the lawsuit, said Gaspar Cardoso, chairman of De Beers Angola and one of the company's two top negotiators.

Ralfe gambled. He acceded to the country's demands, and Angola then dropped its lawsuit. But it also reduced De Beers's exploration area to 1,860 square miles from 37,200 square miles. The deal also called for Angola to take 70 percent to 80 percent of profits, with De Beers getting the rest.

''We are going slowly, step by step" with De Beers, Finance Minister Jose Pedro de Morais said in an interview in his Luanda office.

The company's apology, Morais said, was critical to dos Santos. ''We are ready to move ahead with them. We are not a backward-looking government."

De Beers also wants to look ahead. On a recent daytrip to the area on a private plane, Skinner, 42, the head of the company's Angola operations, took company employees on a tour of the operations. Many were in their first week on the job. Most would be based in Luanda, but Skinner wanted them to understand first-hand the company's mission.

The group left De Beers's district base in the town of Lucapa and traveled on gravel roads in vans 25 miles north to the Camissombo hill.

At the hill, the group formed a half-circle around Skinner, a soft-spoken, self-effacing South African native who couldn't contain his excitement -- even though he had come to this spot many times before. He pointed at the hill, and talked about how difficult it would be to find diamonds -- and how great it would be.

''At the end of the day, when you're an old man, sitting under a tree in the shade somewhere, you think, 'What is the legacy I left behind?' " Skinner asked. ''Everyone here in this area has been hammered by almost 30 years of war. For this generation of people, we have to make sure we do better. A massive diamond find would help."

John Donnelly can be reached at donnelly@globe.com