De Beers produces 60% of the world's diamonds

Under the deal De Beers will re-enter Angola after leaving in 2001 after a breakdown in an agreement with Endiama.

The joint firm will have exclusive mineral rights to mine and market gems from deposits which may be discovered.

In line with Angolan legislation, Endiama will own 51% of the joint venture and De Beers 49%.

Angola's Council of Ministers approved the new arrangement on Friday.

Increased production

Last year Tiago Dias, planning and investments director at the state diamonds company Endiama, told Reuters news agency that Angola hoped to be one of the world's top three diamond producers by 2007.

He said production would increase to 10 million carats by 2006, from six million in 2003.

Last week De Beers, which is 45% owned by mining conglomerate Anglo American, came under fire from the South African government for appointing a white male boss.

De Beers had announced earlier that Gareth Penny would take over as managing director from Gary Ralfe next year.

Deputy minister of minerals Lulu Xingwana questioned De Beer's commitment to black empowerment, saying she was disappointed with the choice.

De Beers produces about 60% of the world's diamonds and there have been calls for it to shift its sales division from London to Africa.