Despite being disrupted by the ongoing civil conflict in Angola, the country’s mining industry continues to provide the country with foreign earnings. Mining contributes 12% of Angola’s GDP (excluding the oil sector), of which diamonds are responsible for over 98% of the government’s earnings.
Angola’s main mineral products are oil and diamonds. However, prior to the outbreak of one of Africa’s longest civil wars, Angola was an important producer of iron ore, gold and copper. In fact, prior to 1963, Angola’s copper production ranked second after diamonds. Angola’s diamond industry has come under the spotlight following the implementation of the Kimberley Process that was set up to deal with the issue of conflict diamonds. It is a widely accepted fact that Angola’s ongoing civil war has been funded to a large extent by the trade of rough diamonds, especially by rebel group, UNITA. However, fresh optimism for peace exists in the country, following the death of UNITA leader Jonas Savimbi early in 2002.
Base metal and gold potential exists, but has not been properly exploited due to the ongoing civil war, which hampers access to most of Angola. Without a doubt, Angola remains an extremely attractive target for the discovery and development of world class ore deposits.
Minerals Legislation Overview
The World Bank and the British Geological Survey have been assisting the Angolan Government with the promotion of the minerals sector, including the drafting of new mining laws.
The Mining Law of 1992 (1/92) reflects the new mining policy which aims at reducing the dominance of the State owned companies by eliminating monopoly of mineral rights and providing opportunities for the private sector to invest in the mining sector. The Mining Law is consistent with the Law on Foreign Investment emphasising:
- All minerals belong to the State. This is enshrined in the Constitution. The Ministry of Geology and Mines manages mineral exploration and development activities through the granting of relevant prospecting and mining titles as well as supervision.
- A Prospecting Licence is issued for a maximum period of five years, including extensions. Surface charges are 1 or 3US$/km2/year at issue and US$3/km2/year for renewal.
- A work plan must be provided together with minimum expenditure, technology to be used, staff qualifications and skills, and any other requirements that may be imposed. A programme of employment and training of Angolans must also be given. At renewal, 50% of the area must be relinquished.
- Periodic reports by the licence holder must be made covering all data and information obtained during the carrying out of the programme.
- Compensation must be made by the licence holder for any damages to third parties.
- A Prospecting Licence holder may apply for and be granted a Mining Title, after submission of a feasibility study. An applicant may also be a respondent to tenders promoted by Government on deposits already evaluated. Operations can only be carried out by mining companies, either state owned, mixed, private or joint, and partnership.
- The period of title varies from deposit to deposit and is dependent on the life of the mine and extended by one or more extension periods on the same or negotiated conditions.
- Prospecting Licenses and Mining Titles are not transferable, assignable or negotiable without prior approval by the Council of Ministers.
- The Government has the option to participate in companies undertaking mining. For large projects of investments more than US$50m the Government requires 10 – 15% free equity. Any excess shares would be bought at market rates.
- Generally rights and obligations are specified in the licence. Based on the fiscal regime indicated in Section 5 below, applicants make proposals which can be negotiated as a package during the process of granting a Mining Title.
- Agreement models are available for Exploration and Mining.
- There are no special provisions for the small-scale mining sector nor any legal distinction between large, medium and small-scale mining.
- The existing Diamond Law gives mineral rights exclusively to ENDIAMA, the State National Diamond Company, which can go into joint venture with private foreign/local investors. In this law a special provision is made for small-scale mining.
- The Government included environmental issues within the Ministry of Fisheries. The Mining Law of 1992 includes a Section on environmental protection, during operations and after closure. The potential environmental damage for a project is to be considered in evaluating its viability.
African Diamond Council, African Diamond Producers Association (ADPA), Tecmad Mining Services SARL, African Diamonds Producers Association, Almaz Rossi, Angola Selling Corporation (Ascorp), De Beers Angola, Endiama (Empresa de Diamantes de Angola), Ferrangol, Instituto Geologico de Angola, Masupastela Angola Mining Ventures, Ministério de Geologia e Minas, Ministry of Geology and Mining, PAI Limitada, Petrominerals, Quantum African Mining, Randsburg International Gold Corporation, Sociedade de Desenvolvimento Mineiro de Angola, S.A.R.L., Sociedade Mineira de Catoca, Sociedade Mineira do Angola, Lda
Calonda, Camafuca, Camatchia, Catoca, Chitotolo, Cuango, Fucauma Mine, Luarica Mine, Lucapa, Luo, Mufuto, Rio Lapi Diamond Mine, Yetwene