Angola, the fifth-largest diamond producer, has cut mine taxes and plans to spend billions of dollars to attract investment into mineral deposits, Geology and Mines Minister Francisco Queiroz said.
The projects include the $900 million Cassinga iron-ore mine, planned fertilizer output of 400,000 metric tons a year and a $400 million manganese development, Queiroz said in an interview last week in Luanda, the capital. A mining law enacted in November that cut tax to 25 percent from 35 percent was followed by investment from companies including diamond producer De Beers and Sumitomo Corp. (8053), which is developing an ammonia and urea plant, he said.
“The new law is very clear with lots of security for investors, which gives them certainty, transparency and guaranteed mining rights,” said Queiroz, who drafted the new code. “It has flexibility for companies to join with partners based on negotiation with the government, not imposition, which is a break from the past.”
Angola wants to diversify its earnings away from the crude oil and diamonds that make up almost all its exports, more than 40 percent of economic output and over 70 percent of government revenue, he said. Production of gems, Angola’s chief mineral export, may increase to about 9 million carats this year from 8.3 million carats in 2012 as four new mines start, Queiroz said.
The southwest African country is rebuilding its economy after a civil war that lasted from independence from Portugal in 1975 until 2002. It pumped 1.78 million barrels a day of oil last month, second only to Nigeria in Africa, mainly from offshore fields run by companies including Total SA (FP), Exxon Mobil Corp. (XOM) and BP Plc. (BP/)
The rehabilitation of the colonial-era Cassinga iron-ore mine near Jamba in Huila province about 750 kilometers (466 miles) southeast of Luanda will be funded about equally by the state and Angola Exploration Mining Resources. Angola Exploration, known as AEMR, is a partnership between closely held Luanda-based DT Group and Empresa Nacional de Ferro de Angola, the state iron-ore company known as Ferrangol EP, the minister said.
It’s too early to determine exact production levels because reserves are still being assessed, while indications are the mine could operate for more than 40 years after a start in 2015, he said.
In October Queiroz said the mine would produce a total of 20 million tons a year of ore, 7 million tons each from the Cassinga North and South mines and the rest from the Cateruca land reserve. Reserves are estimated at 400 million tons, according to the state-run Jornal de Angola.
Ferrangol will build new roads and airports for the project and expand the port at Namibe on the Atlantic Ocean, he said. The rebuilding of the Mocamedes railway line that heads inland from Namibe was completed last year.
AEMR and Ferrangol are also involved in the re-opening of the Kassala-Kitungo iron-ore and manganese mines in Kwanza North province, Queiroz said. The sites were estimated to hold 300 million tons of iron ore and 5 million tons of manganese, according to Jornal.
Exploration for gold at Mpopo in Huila and Chipindo in the northern enclave of Cabinda is being undertaken, he said.
Australian Stock Exchange-listed Minbos Resources Ltd. (MNB) has an equal share of the Cabinda Phosphate Project with Petril Projects Ltd., a subsidiary of LR Group, and plans to start production in 2015. Vale Fertil Lda., an Angolan division of LR Group, will begin output by the end of next year from a project in the northern province of Zaire, Queiroz said.
The projects will supply 200,000 tons a year to the domestic market export the same amount, mostly to the U.S. and China, as well as to Europe and India, he said. Angola wants to double annual output to 400,000 tons within five years, he said.
“Our study of the international market has shown there is a phosphorus production deficit of about 25-30 percent and we hope to supply 10-15 percent of world demand in 10-15 years,” Queiroz said.
The Cabinda project contains the advanced exploration sites Mongo Tando, Chibuete, Ueca and Chivovo, and Cacata, a site in development, according to a March 15 regulatory filing by Minbos. The area’s exploration target confirmed by Coffey Mining Pty Ltd. is 333 million tons to 538 million tonnes with grades of 10-20 percent phosphate, Minbos said.
The company was negotiating to bring on a strategic partner by the end of March to help develop the project, according to a March 27 note by Independent Investment Research Pty Ltd. Annual output is forecast at 1.2 million tons and Minbos can upgrade the phosphate to 32 percent with little additional processing, the analyst said.
The Zaire project near Lucunga is estimated to cost $1 billion to construct a power plant, sea port and factories to process phosphate into ammonia, state news agency Angop reported in August, citing Ehud Levy, Vale Fertil project manager. Reserves were estimated at 130 million tons, according to Angop.
The Mavoyo manganese project in northern Uige province targets an early 2016 restart of a mine that operated before independence, Queiroz said. The area near the border with the Democratic Republic of Congo is also known for its copper deposits.
The government wants to increase domestic production of granite and marble supplies to 40 percent of the market from 10 percent currently over the next five years, Queiroz said.
Negotiations are continuing with Alcoa Inc. (AA) to build an aluminum smelter to produce 750,000 tons of the metal a year, he said. It requires the construction of a hydroelectric power dam in Kwanza South or Benguela province, and the government would repay the cost of the plant to Alcoa, he said.
Alcoa said in Oct. 2011 it was targeting first production in 2020 and had signed an agreement for a 12-month exclusivity period to negotiate a power contract and cooperation agreement with the government. Angola pledged to supply 1,300 megawatts of power to the aluminum industry.
To contact the reporter on this story: Colin McClelland in Johannesburg at email@example.com
To contact the editor responsible for this story: Antony Sguazzin at firstname.lastname@example.org