Angola Mining Report Q1 2013

Includes 3 FREE quarterly updates

Angola's mining industry is set to reach US$2.4bn in 2017, growing at an average rate of 3.6% per annum. The rate of growth will remain stable thereafter with diamonds providing the main thrust for production growth over the medium term. New areas of mining including iron ore, copper and phosphates are also receiving increasing international interest from investors and are expected to provide further momentum for Angola's mining sector over the long term.
Angola Goes For Gold
According to reports in July 2012, production was close to starting at gold mining facilities in the municipalities of Jamba and Kuvango in Angola's Huíla province. Gold extraction will follow the termination of exploration work in the region, which is reported to be in the final stages. The projects will be opened up for investment from interested local and international parties following the termination of the exploration process. There are currently no details regarding the size and grade of the deposits.
Prospecting To Begin In Kwanza Sul In Q312 Angola-based diamond miner Sociedade Mineira de Catoca (SMC) was awarded the rights to carry out prospecting for diamonds in the province of Kwanza Sul. The announcement followed the completion of surveying work by SMC in the mining zones of Gango and Quitúbia, both of which encompass a concession area of 3,000km sq. The company is due to install equipment for prospecting in the area over the coming weeks in addition to carrying out demining and geological analysis of the region. The project will be the first diamond mining enterprise in Kwanza Sul province and is the culmination of ongoing attempts to launch exploration projects at Gango and Quitúbia since 2001.
Mining Dwarfed By Oil
Mining & Oil Sector Value (US$bn)
Source: BMI, UN

REGULATORY ENVIRONMENT

Operators within Angola's mining sector are starting to reap the benefits of a new mining code, whose long-awaited introduction came into effect at the end of 2011. In compiling all existing mining laws and regulations, it is hoped that the new code will ensure greater cohesion within the country's natural resources sector than the original code, introduced in 1992. The new legislation will apply to all aspects of the prospecting, exploration, research, appraisal and exploitation of all natural resources located within the country's borders with the exception of gaseous and liquid hydrocarbons. A specific section of the code is dedicated to offshore mining activities and licensing. Among the greatest benefits of the new code to overseas investors has been the removal of obstacles preventing investors from taking a majority stake in locally owned companies. In addition, contracts for prospecting and exploration will now be covered by a single mining agreement with the government while the amount of tax payable by mining firms to the state has been lowered from 35% to 25%.

KEY PLAYERS

Angola's mining industry is dominated by diamond exploration and production. Major reserves of diamonds are located in the provinces of Lunda Norte and Lunda Sul. Local firms dominate the market, with state-owned Endiama the exclusive concessionary of mining rights for diamond-mining in Angola. Sociedade Mineira de Catoca (SMC) operates the Catoca mine, the world's fourth-largest kimberlite facility. SMC is 32.8% owned by state-controlled Endiama, 32.8% by Russian concern ALROSA, 16.4% by Odebrecht and 18% by Israeli company LLI Holding. There is increasing interest from overseas firms, with companies such as Trans Hex Mining, a South Africa-based miner, making entries into the market in recent years. The company has a stake in the Luana, Luarica and Fucauma mines.