Fuelling the war: Diamonds and oil

Most ordinary Angolans have not seen any benefit from vast natural resources which are gaining unprecedented importance as an old conflict enters a new stage.

" The war has become, ever more starkly, a battle of oil against diamonds "

Allies like the US and South Africa which once directly supported Jonas Savimbi's Unita movement have turned their backs since the end of the cold war and the war has become, ever more starkly, a battle of oil against diamonds.

Click here to watch a report by the BBC's Anna Richardson on how mineral wealth is driving the war.

Unita's diamond riches

The vast northeastern bush is considered easy terrain for guerrillas, and widely-scattered alluvial or river-borne diamonds, including some of the world's finest gems, yielded Savimbi around two thirds of Angola's estimated $7-800m diamond production in 1997.

A few hardy government-sanctioned foreign companies also operate in small, well-defended pockets in the northeast, despite recent Unita attacks.

Angola also has diamond-bearing kimberlite whose potential is thought to be greater than the alluvial resources.

One such area is already being mined but the others, like the large dormant iron ore and other mineral reserves needing huge and vulnerable investments, will probably not be developed until fighting ends.

The government's oil advantage

While Unita funds its war almost entirely with diamonds, the Luanda-based government relies largely on oil.

A slew of giant deep water finds since French company Elf discovered the billion-barrel Girassol field in 1996 should help propel production from today's 775,000 barrels per day (bpd) to 2m bpd within eight or ten years.

In addition, three licence areas further offshore are thought to contain the largest untapped oil reserves being offered for exploration anywhere on earth, and after these come into production in ten years or so output could rise to three million bpd or more, equivalent to over a third of Saudi Arabia's output.

If low world oil prices persist, some of these field developments could be delayed. But production will rise fast in any case, in contrast to Unita's alluvial diamond resources, which are gradually becoming degraded after years of extraction, mostly by small-scale diggers or garimpeiros.

The movement mined less than half last year's total Angolan output of $5-600m, and they will struggle to exceed this in 1999, despite increased Unita control over some diamond areas.

This is why, if the government holds together in Luanda into the early years of next century, they will begin to enjoy an expanding resource advantage.

"We always take losses, then recover," a general told a diplomat. "If we lose a tank, we pick up the phone and order another one. If Unita loses one, it is more difficult."

Nick Shaxson is a regional analyst and writer on southern Africa

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