Op-Ed: What can we expect from the future of Angola’s mining sector ?

PUBLISHED: Wed, 20 Mar 2019 18:00:37 GMT

By Zandre Campos, Chairman and CEO, ABO Capital

Angola is currently the world’s fifth-largest producer of diamonds with 60 percent of the country’s diamond resources not yet utilized. Representing nine percent of the diamond value throughout the world, the country is mining high quality diamonds. Meanwhile, diamond mines around world are getting too old to explore. Angola is primed to elevate its status as a diamond producer in Africa with the guidance of Angolan president João Lourenço who believes the country should flourish with the untouched natural resources in its mines. The vision by President Lourenço for mining production in the country will increase revenue and attract more investment opportunities in the nation.   

The country’s plan to double diamond mining initiatives raises its expectations for growth worldwide in the industry as it affiliates with global trading center, Antwerp World Diamond Centre. The nation identified the importance of diversifying its exports to no longer be heavily reliant on oil, its leading export. Angola’s mining resources are plentiful and bring promising prospects for the area. While, the country elevates its diamond production, expanding its exports of minerals with copper and iron ore empowers the country’s economic growth with new sources of revenue. 

Angola is the next mining hub

Since the civil war concluded in 2002, the nation has limited the exploration of mines throughout the country as the business environment was carefully navigated following the end of the war. Now, President Lourenço plans to double Angola’s diamond production up to 14 million carats during the next four years, which has experienced several big discoveries recently, including a 46-carat pink diamond in its Lulo mine last year. The discovery was made within the same Angolan mine that uncovered a 404.2-carat diamond in 2016. The mining commitment and resources in the region emboldens Angloa’s new approach to mine and export minerals to enrich the region with Lulo mine captivating the mining spotlight by producing 10 diamonds in excess of 100-carats.

A new national mining code provides the Angolan mining sector with policies regarding the exploration of its vast mining resources to utilize the country’s untapped mining territories to grow and diversify its exports. The rules enable the Angolan mining industry to move past its previously fragmented and outdated guidelines in the space.

President Lourenço stated in a 2018 speech, “We recognize that the policies for this sector, established by us, do not best serve the interests of the country nor of the producers.”

Under the direction of President Lourenço, reform to Angola’s secretive diamond industry is taking place to increase profits and production. The new code will create more diamond flow to Antwerp World Diamond Centre, which is committed to transparency within the mining industry. With 70 percent of its diamonds being exported to the United Arab Emirates, the work with Antwerp World Diamond Centre will escalate its mining resources.

In 2017, Angolan diamond production reached 9.4 million carats, for a market value of 1.1 billion dollars. However, politically connected buyers had previously negotiated the purchase price of diamonds for below market value. By enabling diamond producers to select their own buyers with prices comparable to international benchmarks, producers will see a greater return for their mineral production and investments. The investor-friendly approach will spawn new projects in the region to take advantage of the natural resources available to the Angolan mining industry and broaden its exports.

The need to explore the untapped land for mining

Angola’s government is reliant on oil as an export that brings in nearly 80 percent of the government’s revenue. Meanwhile, only 40 percent of its diamond resources have been explored. As the country’s second leading export behind oil, Angola’s utilization of its land and resources will lead to more economic stability with a more diversified export market.

Diamonds are a high priority export for President Lourenço, but the region represents the opportunity for further mining assets in copper and iron ore. The Democratic Republic of the Congo and Zambia are renowned as leading copper producers in Africa. However, Zambia doesn’t have access to the Atlantic Ocean for exportation and the Democratic Republic of Congo is limited by a 25-mile coastline. The Copperbelt extension into Angola, leads valuable properties for significant copper and iron ore deposits. In the 1960s, Angola was a major exporter of iron ore. With more than half of the mining area to be explored in Angola, the region has rich mineral prospects to increase revenue in the country.

Endiama opens diamond mining sector to investors

Endiama, Angola’s national diamond company, has begun to prospect opportunities at the Luaxe kimberlite, which exudes a mining life of more than 30 years and potential to double production in five years. The opportunity for private investors to align in the market leads to greater financial resources for those that support the latest mining undertaking to produce plentiful resources in the nation.

Endiama revealed kimberlite and alluvial projects are open to investors as part of the rising Angolan diamond industry. The kimberlite projects include Camafuca-Camazambo, Mulepe, Chiri, Sangamina, and Tchegi, and the alluvial projects are at Muanga, Cabula, Sanjungo, and Muriege. Further, Endiama will continue to drive new opportunities via partnerships with private companies to grow diamond mining initiatives in Angola.

Angola’s mining outlook

The Angolan government is making strides towards having the mining sector create a significant impact on the future growth of the country. The decades of lost resources and investments can’t be reversed overnight, but the 4.4 percent growth forecast for the minoring sector validates its potential to become one of the three largest diamond producers in the world. The economic and structural constraints must be overcome with the new direction set on elevating Angola’s position as a leading diamond provider. With mineral resources beyond diamonds, the country will be able to reduce its oil dependence, while generating a promising outlook globally within the mining sector. 

About the Author

Zandre Campos is chairman and CEO of ABO Capital, an international investment firm that invests in companies in the healthcare, energy, transportation, hospitality, education, technology and real estate sectors throughout Africa. ABO’s mission is to create global value for developing countries in Africa, while contributing to their economic development.

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