Angola which is over-reliant on oil and diamonds is beginning to diversify its economy through tapping other resources, namely gold, copper and iron.
Angola which depends from oil for 95% of its export revenues, while the rest is overwhelming dominated by diamonds, is desperately trying to diversify its economy, in particular through tapping other mining riches. The issue is not only a matter of choice but also of necessity in front of the dramatic fall of the oil price by more than half from U.S. $ 106.4/barrel to $ 48.92/b between early June 2014 and June 2016. Against this background, in 2014, the Chinese company Citic, the Brazilian corporation Costa e Negócios and a consortium associating the Portuguese and Spanish geological institutes have started a vast four years programme to identify mining resources within the framework of Angola’s Plano Nacional de Geologia (Planageo). This programme which is the world’s most important with a total cost of $ 400 m. combines geophysical, geochemical and geological explorations. It will allow Angola to map entirely its national territorial and analysis the samples collected during these works in new labs which are being created in several parts of the country.
The aim is to offer investors a range of potentially interesting targets. According to the manager general of Planafeo, Abner Oliveira, the main challenge is to avoid the landmines which were planted by both sides during the war, which at point were estimated at 15 million by UNICEF. Yet, the Ministry of Geology and Mines’ guess is that Angola could produce gold by 2018. Important deposits have been already discovered at M’Popo in the Southern Huíla province by the Sociedade de Metais Preciosos de Angola (Somepa), which is a joint venture between the Ferrangol parastatal company and several domestic private companies who plan to invest up to $ 280 m. in the project. According to Ferrangol’s CEO, Diamantino de Azevedo, the company is also carrying out explorations on another concession at Chipindo in the same province, through another joint venture with another group of local companies. Besides, Ferrangol is also planning explorations in the Cabinda, Cuanza Norte and Moxico provinces. The presence of gold in these areas is already confirmed by existing artisanal exploitation. The question however is the deposits contain enough gold to justify industrial operations.
Simultaneously, Angola could become another copperbelt, alongside with the neighbouring Democratic Republic of Congo and Zambia. In the North-West Uíge province, at the Congolese border, exploration is carried out since 2009 on the Mavoio deposit whose reserves are estimated to some 35 million tonnes by the Ministry of Geology and Mines. The local nomenklatura may reep the benefits, as show the presence in the capital of the Sociedade Mineira de Cobre de Angola which develops the project of the Genius Mineira company, owned by the former Forças armadas Angolanas chief of staff, Gen. João de Matos and the former governor of the Banco Nacional de Angola, Mario Pizarro. Prospection has some chances to be fruitful because since the area already produced copper before independence. The ministry of Geology and Mines’ plans are to launch as well prospection in the Bembe, Lueca, Quimbumba and Quinzo areas in the same province where mineralogical indicators have been recorded, and in the Kwanza Sul and Cuando Cubango provinces. The Maquela do Zombo area in the Uíge province where the Mavoio mine is locating is begin to acquire the necessary infrastructures for the exploitation and the evacuation of the copper including high power lines from the Capanda hydropower dam on the Kwanza river and two roads between Uíge and Maquela do Zombo.
According to the Ministry of Geology and Mines, the production should resume in 2017 at the Cassinga iron mine in the Huíla province whose installations were destroyed during the civil war. A production level of 1.8 million tonnes of mineral is expected by the operator, the Ferrangol company. Its main outlet will be the Aceria de Angola (ADA) steelplant at Barra do Dando, in the Bengo province, at 50 km to the North-East of Luanda, which was inaugurated in December 2015 and has been developed by the Lebanese businessman, Georges Fayez Choucair. The Cassinga mine ore will be used by ADA which invested $ 300 m. in the plant to increase its current production level from 250,000 tonnes per annum to 1 million tonnes, since the supply of scrap metal including old tanks is not sufficient to allow ADA to reach that level.
Meanwhile, the Brazilian steelmaker Modulax, which is Ferrangol’s partner in the Sociedade Mineira do Cuchi (SMC) joint venture is investing $ 200 million in a pig iron plant at Cutato, in the Southern Cuando Cubango province. During a first phase, it will have an annual output of 96,000 tonnes, says the company’s managing director, Geraldo Basques. The second phase which will involve the construction of two additional furnaces will enable the SMC to reach to total capacity of 500,000 tonnes per annum. The project will generate a total of 3,500 direct jobs, says Basques.
The long term objective is to create a second integrated steel complex. The plant site is close to Menongue and is connected to the port of Namibe by the Caminho de Ferro de Moçamedes railway line which is has just been rehabilitated by the China Hyway corporation. All these are indications that Angola has definitely decided to diversify its economy. Beside the industry, the challenge is to stimulate the agricultural sector to help the country which was a coffee exporter before the independence in 1975 to reduce its food dependency from imports and increase its food security. Within this context, the exploitation of the vast phosphate deposits of Cabinda and Mucula (in the Zaire province) which represent a combined reserve of 500 million tons could play an important role, by providing Angolan farmers with locally-produced fertilizers at a competitive price.