Published in furtherafrica.com
On the 26th March 2020, was approved the Presidential Decree number 143/20, that establishes the new Governance model of the mining sector in Angola.
Considering the change of paradigm occurred in the sector over the last few years, there was a need for the Angolan State to create a new robust and stable regulatory model adapted to the new reality.
This law was conceived with the purpose of being an essential instrument to allow the mining sector to be a viable alternative and a way out of the current crisis in the country, namely by diversifying the sources of tax revenue. It also permits the increase of the country’s foreign exchange resources.
Angola has a great mining potential which, if well managed, could in the long term be a necessary industrial alternative for the country’s development considering the industry itself as well as the various production chains brought by the prospecting, production, manufacturing, and marketing of the products.
The Executive focus leans in placing the extracting mining industry as an alternative to petroleum.
The new legislation diminished the direct presence of the State (through the minimum intervention principle) at the mining economical activity and optimizing the role of the private agents. The focus of the Ministry for Mineral Resources, Petroleum, and Gas is now restricted to a strategical orientation function, allowing the state companies to focus more on their corporate object. Alongside these measures, the law also established the separation and the distinction of the administrative activities and the corporate activities of the bodies of the State’s indirect administration on the mining sector.
Therefore, the Mining Sector Governance Model Institutions are:
- President of the Republic;
- Ministry for Mineral Resources, Petroleum, and Gas – with the mission of coordinate, supervise, and control the activities of the sector, as well as guarantee the long term management of the national mineral resources;
- Ministry of Finance – with the responsibility to exercise the superintendence on the patrimonial and tax components of the activities related to the mining sector, namely the auditing of the accounts;
- Geological Institute of Angola – responsible for collection and management of the geological information of the State;
- National Agency of Mineral Resources – with the purpose of assuring the planning, preparation, and launching of the mining concessions for the market, e. to negotiate and manage contracts;
- Endiama – with a focus on their corporate object (Diamond extracting company);
- Sodiam – keeps the diamonds’ commercialization function and assures the optimization of the implementation of the new policy of diamonds’ sales, as well as the operationalization of the Diamonds Exchange.
The strategy of the Government to the sector has 23 projects, 5 related with diamonds, 4 with gold, two with iron, two with phosphates, one with copper, and nine with ornamental stones. The exact value of each project is only known after the approval.
One of the more prominent examples is the mining investment project for the exploration of the elements existing on the rare fields by the Ozango Mineiras S.A., established by the Presidential Decree number 59/20, of April 21. The approved value of the investment is equivalent in AKZ to 131 million USD. The exploration and assessment area is located between the municipalities of Caála, Longonjo, and Ukuma, Huambo Province.
In the same trail of this project, there are other projects already approved by the Executive, specifically:
- The memorandum of understanding signed between Sodiam E.P. and the south-African company Blue Glacier that intends to install a polishing plant in Saurimo Development Pole (Lunda Sul), where it plans to invest 36 million USD in the first three years;
- The agreement established between Sodiam, in partnership with Endiama, and the Turkish company Tosyali Holding that will consist of a Lapping Factory also in the Saurimo Pole;
- Tosyali Holding also signed other mining investment contracts regarding a steelmaking project located in Kassing, Huíla Province which was inoperant since the ’70s;
- Other leading multinational companies such as the Russian Alrosa, which has initialed an agreement with Endiama for the prospection of diamonds, and the British based AngloAmerican already announced investments in this field.
Considering that the most important copper and cobalt mines in the entire world are situated in the Copperbelt Region, covering Angola, Zambia, Congo D.R., and Zimbabwe, the investment in this market becomes very attractive to the players with interests in this sector, catapulting Angola to a preferential position allowing the country to attract foreign investments in the next few years.
Article by Marco Correia Gadanha
Marco Correia Gadanha is a partner of the Portuguese law office MC&A. He is specialized in legal advice to international transactions. Marco has extensive experience of legal practice in Portugal and in the Portuguese-speaking African countries. Since 2008, he has practiced mainly in the areas of labor and litigation, assisting national and international clients in these and other matters, namely corporate law, especially in Portugal, Angola and Mozambique. He graduated at the University of Coimbra in 2005 and he holds post-graduations in Labor and Angolan Law.