Angola's diamond marketing monopoly has reported an 87% plunge in annual profits, hit hard by weakness in the diamond market.

Ascorp however claims that the results still represent good news for the company's majority shareholder, the Angolan government.

Ascorp's contribution to state coffers climbed to almost $63m (�42m) - a threefold increase on the sum paid in 1999 when Ascorp ousted De Beers to become the only authorised diamond buyer in Angola.

At the time, Ascorp promised to hand over a larger share of its revenues to the government.

'Blood' diamonds

The company was set up in 1999 after De Beers left Angola on bad terms with its old partner, the Luanda Government.

That was at a time when the role of diamond revenues in funding Africa's civil wars had begun to make headlines around the world.

That prompted a new effort inside the diamond industry to keep closer check on the individual diamond traders who supply companies like De Beers and Ascorp In Angola.

The newcomer introduced a register of traders and promised to hand over a larger share of its revenues to the government.

So far, it has lived up to that promise - even though the market price of Angolan diamonds slumped by almost a quarter.

Last year's net profit of less than �2m compares to earnings of $14m in 2000.

Total sales were down slightly even though the number, and weight, of diamonds sold went up by more than 25%.

Ascorp's monopoly of the Angolan diamond trade has made it a serious rival to the global diamond marketing giant De Beers.

Angola is the world's fourth largest diamond producer, which leaves Ascorp controlling more than 10% of the world's rough diamond supply.

Illegal supply

However, the latest figures give no breakdown of the ratio between diamonds purchased by Ascorp from official mines, and unofficial diggers, known as "garimperios".

The split in 2000 was roughly half and half - but it's widely believed that many "garimperios" are reluctant to sell to Ascorp because it uses its monopoly position to keep prices low.

Large volumes are smuggled out of the country as a result.

A UN report last year estimated that the illicit total could be as much as $1.2m every day.