As reform kicks in exploration companies head to Angola
Strategic government decisions have put Angola’s mining sector back on the world map as the country positions itself as a top global mineral producer. The result: more exploration companies heading to Angola.
By Leon Louw owner and editor of WhyAfrica
Angola is on a drive to diversify its economy away from a reliance on oil. With oil production at about 1.14 million barrels per day in 2021, the country is the third largest oil producer in Africa. However, Angola is slowly diversifying its economic base by focusing specifically on mineral related development.
A diamond powerhouse
According to Diamantino Azevedo, Angola’s Minister of Mineral Resources, Oil and Gas, the country is on its way to becoming the second-largest producer of rough diamonds globally by 2030.
Several regulatory reforms across the mining space have made it easier for foreign based companies to invest in Angola, and Azevedo says that Angola will accelerate its diamond mining activities in2022 and beyond.
Although Angola is the fourth largest diamond producer in the world (the country produced about 9.3 million carats in 2021), most of the hinterland has not been explored. More and more exploration companies are heading to Angola as the regulatory reforms take effect.
Although the political climate has started heating up in the run-up to elections in August, it does seem that incumbent João Lourenço is in the driving seat to win a second term with reasonable ease.
Lourenço economic reforms were interrupted by the Covid-19 pandemic, but in its wake, it is all systems go as the country moves into the next phase of rebuilding its economy devastated by the four-decade rule of Jose Eduardo dos Santos.
Reforms to lure diamond investors
With production targets set for 10.3 million carats in 2022, reforms such as the creation of an agency that serves as national concessionaire; the approval and implementation of Presidential Decree no. 143/20 – a governance model to increase efficiencies in the mining sector through the reduction of the State’s participation; the optimisation of the role of the private sector; the promotion of transparency in the sector; and fiscal incentives to boost exploration, have already piqued the interest of global investors.
In December 2021, global diamond company, De Beers, announced its application to explore Angola’s northeastern region. With the Ministry pushing state-owned diamond company Endiama to pursue partnerships and deals with other global giants, the country is set to see rapid growth across its diamond industry.
Angola and the energy transition
But Angola has more than just diamonds. The energy transition and a move towards Electric Vehicles (EV) have heightened demand for rare earth minerals, lithium, nickel, cobalt, manganese, and graphite, crucial for battery performance, as well as neodymium and praseodymium (NdPr) needed for wind turbines and EV production.
Angola hosts an abundance of these critical minerals, and the country is set to become key in the African energy and mining sector’s transition over the next 10 year.
New developments in the country include Pensana Rare Earth‘s Longonjo Project – set to become the first large-scale NdPr rare earths mine in Africa with production targets of 56,000 tons per year; Minbos Resources securing a mining license for the Cabinda phosphate project in 2021; and Anglo American signing five contracts for mineral exploration and extraction in Angola in 2021, among others. By targeting investment and development within the rare earth and minerals sector, Angola is focused on becoming the premier supplier of energy transition-related minerals.
As reform kicks in exploration companies head to Angola
Leon Louw is the founder and editor of WhyAfrica. He specialises in natural resources and African affairs.
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