While Angola currently leads crude oil production in sub-Saharan Africa, the country has also made significant headway in its mineral wealth extraction, with the Ministry of Mineral Resources, Petroleum and Gas driving development in the sector to support economic diversification goals.
In the third quarter of 2021, Angola’s mining sector accounted for 1.6% of GDP, primarily through the export of diamonds. Yet despite being the sixth-largest diamond producer globally, Angola has only exploited 40% of its reserves.
Furthermore, with demand for strategic minerals and rare-earth elements anticipated to increase dramatically – owing to the global energy transition and use of strategic minerals in lithium-ion batteries – the sector is expected to significantly expand its contribution to GDP growth. As Angola celebrated its 37th anniversary of Mining Labor Day in April 2022, several key developments across mining and extractive industries are taking the spotlight.
Angola to Become Second-Largest Diamond Producer Globally
According to Angola’s Minister of Mineral Resources, Petroleum and Gas, H.E. Diamantino Azevedo, the country is well on its way to becoming the second-largest producer of rough diamonds globally by 2030. Owing to significant developments across the diamond space, as well as market-driven regulatory reforms enabling investment in the sector, Angola is accelerating diamond mining activities in 2022 and beyond. Currently, the country serves as the fourth-largest diamond producer globally, with production estimated at 9.3 million carats in 2021. However, approximately 60% of the country’s mineral basins remain unexplored, thus opening up critical opportunities for further exploration.
With a production target set for 10.3 million carats in 2022, the sector has already attracted growing interest from global investors, owing to deep industry reforms such as the creation of the National Agency of Oil, Gas and Biofuels agency as national concessionaire; the approval and implementation of Presidential Decree 143/20 – a governance model that streamlines the mining sector through the reduction of the State’s participation; the strengthening of the role of private industry; the promotion of transparency in the sector; and fiscal incentives to boost exploration of mineral wealth. In December 2021, global diamond firm De Beers announced its application to explore Angola’s northeastern region. With the Ministry pushing state-owned diamond company Endiama E.P. to pursue partnerships and deals with global mining giants, the country is preparing for rapid growth across its diamond industry.
Retaining Value In-Country
Meanwhile, the Ministry is focused on building capacity within the domestic mining sector in a bid to ramp up economic and industrial development. Through progressive local content policies and a push for local production and manufacturing industries in Angola, the country aims to stimulate job creation, industrialization and infrastructure development. With 95.5% of rough diamonds currently exported, in April 2021, the Ministry announced plans to cut 20% of diamonds domestically. Angola also inaugurated its $77-million Saurimo Diamond Development Hub in August 2021, which unites the entire diamond value chain and comprises three major diamond cutting factories, as well as launched a diamond cutting and polishing training center to improve capacity building and skill transfer.
Accordingly, Angola has made significant progress in up-skilling its local mining workforce, an achievement that was celebrated during Mining Labor Day 2022. Established by the then-Defense and Security Council, Mining Labor Day recognizes the role that mining workers play in transforming Angola’s mining sector and the fabric of the national economy. As the country celebrated its 37th anniversary, global investors, regional stakeholders and Angolan mining companies turned to both new and existing opportunities being created across the burgeoning Angola’s mining sector.
Driving Demand for Energy Transition-Related Strategic Minerals
In addition to diamonds, Angola is rich in iron ore, phosphates, copper, gold and manganese. The country is home to 28 gold mining projects – 20 of which are in the prospecting phase – with average production capacity at each mine estimated at 4.5 kg per month. However, it is Angola’s energy transition-related minerals that are likely to see an uptick in foreign investment. As global priorities shift, and new technologies such as electric vehicles (EV) and battery storage take preference, rare-earth elements found in African countries and used as key inputs into lithium-ion batteries are expected to play a critical role The World Bank posits that mineral production could increase by almost 500% by 2050 and that three billion tons of minerals and metals will be required to support wind, solar and geothermal power expansion, along with energy storage.
Accordingly, the energy transition has heightened demand for minerals such as lithium, nickel, copper, cobalt, manganese and graphite, which are crucial for battery performance, as well as neodymium and praseodymium (NdPr), which are used in wind turbines and EV production. In Angola, several key developments are underway to ensure that the country emerges as a global producer of strategic energy transition minerals – namely, the Longonjo Rare Earth Project, which is set to become the first major rare earth mine in Africa. Located near the city of Huambo, the project has a production target of 56,000 tons per year and will be operated and funded by London-listed Pensana Plc, with additional funds from Angolan Sovereign Wealth Fund, (FSDEA). By targeting investment and development within the rare earth elements and strategic minerals sector, Angola is focused on becoming the premier supplier of energy transition-related minerals to meet the surge in clean energy demand.
This article is from the publication Energy Invest: Angola, which will be distributed at the upcoming Angola Oil & Gas (AOG) 2022 Conference & Exhibition, taking place on November 29 – December 1 in Luanda.