Untapped mineral riches: Angola looks beyond diamond mining

Angola, the seventh-largest country in Africa, is most well-known for being one of the region’s biggest oil exporters. The commodity provides around half of the country’s fiscal revenues, yet it is not oil that is piquing renewed international interest in the country of late but rather its largely untapped mineral wealth.

The Southern African country already has a thriving diamond mining sector – accounting for around 8% of global production – yet approximately 60% of its territory is thought to be unexplored for metals and minerals.

“The fascinating thing about Angola is, it has so many mineral deposits but so few mines,” says Bryony Richards, an economic geologist at the University of Utah, whose specialisms include exploration and critical minerals. “There are enormous swathes of the country that have no real information about them besides some basic geology maps.”

Within these underexplored areas there are estimated to be considerable reserves of critical and rare earth minerals including copper, cobalt, manganese and lithium. These natural resources could provide Angola with an opportunity to diversify away from its over-reliance on oil and diamonds.

Diamonds are forever

Angola’s lucrative diamond mining sector is showing no signs of slowing down, despite a downturn in demand for the precious gems. Last year the country produced 9.7 million carats but expects this to increase by 50% in 2024.

If achieved, this will largely be down to the new Luele project, where state-controlled diamond miner Catoca started production last November. The project is the biggest diamond mine in the country and one of the world’s largest by estimated resources, which are expected to be in the region of 628 million carats to be mined over 60 years, according to estimates by the company seen by Reuters. Another of the company’s diamond mines, Catoca, is the world’s fourth largest.

De Beers, the world’s largest diamond producer by volume, is also increasing its presence in the country, having signed several agreements with the government covering processing and exploration. These are in addition to other contracts signed in 2022 when the company returned to Angola after exiting in 2012.

While diamonds are set to be the biggest contributor to mining revenue in the country for some time to come, there is increasing interest from foreign mining companies in exploring the country’s other resources.

Angola’s untapped rare earth riches

Notable recent investments in Angola include Pensana’s Longonjo rare earths project and Canadian miner Ivanhoe securing exploration rights over a vast area of the country.

The Longonjo rare earths deposit is located adjacent to the Lobito rail Corridor, which is set to provide a quicker western route to market for metal and minerals. The operation, which has an upfront capital cost of $217m (Kz182.21bn), will extract, concentrate, calcine and chemically refine the free dig material to produce a high-value mixed rare earth carbonate that contains 50% total rare earth oxide, of which 24% is neodymium and praseodymium. The commodity will then be railed 273km to the Atlantic port of Lobito for export.

Ivanhoe has gained greenfield prospecting rights in the provinces of Moxico and Cuando Cubango, covering an area of around 22,195km².

Meanwhile, Ivanhoe has gained greenfield prospecting rights in the provinces of Moxico and Cuando Cubango, covering an area of around 22,195km². The company is looking to invest at least $10m in the initial exploration, according to reports.

Although it is early days for rare earths in the region, there is real potential, says Richards, who has spent many years working in Africa, including in Angola’s neighbouring country Namibia and with De Beers in South Africa.

“Although in its new National Development Plan Angola has tried to push diamonds, there is an opportunity for a network of rare earth element mines, and they are [the government is] just starting to realise that,” she says.

A better place to do business?

So are foreign governments. Angola has recently inked some promising partnerships with Western powers. The US Geological Survey signed a protocol on November 2023 to establish scientific cooperation between the two countries. The US will support Angola in mapping its mineral resources, which could help attract more investment into the region. This was followed by a historic visit by Secretary of State Antony Blinken to the country in January.

The US, along with the EU, is also supporting the development of the Lobito Corridor rail project, including launching a feasibility study into how to connect the south of the Democratic Republic of Congo and north-western Zambia to regional and global trade markets via Angola’s Port of Lobito. The corridor could be used to transport mineral wealth from the region.

One of the reasons for this new interest, perhaps, is Angola’s improved profile and reputation as a stable country, which its government is trying to cultivate

Additionally, in November 2023, the EU and Angola signed a sustainable investment facilitation agreement, which is expected to attract new finance from the bloc to sectors where Angola’s potential is currently untapped, including critical minerals.

One of the reasons for this new interest, perhaps, is Angola’s improved profile and reputation as a stable country, which its government is trying to cultivate. The country, which has a history of civil war and well-documented corruption challenges, was admitted to the Extractive Industries Transparency Initiative in 2022, which means it will face more scrutiny, but could also gain more investment if it complies.  

Under President Joao Lourenco, the government is also embarking on a major drive to reform and privatise the economy, including the partial listing of oil behemoth Sonangol and diamond producer Endiama, which pertain to increased transparency.

Furthermore, Angola’s National Development Plan up to 2027, approved last year, is said to position the country well for foreign investment and collaboration.

The challenges facing Angola’s mining future

However, Angola faces a myriad of challenges when it comes to developing any newly discovered resources, says Richards.

“The country has a series of difficult hurdles to overcome in terms of education, investments, disease potential; there is much that is going to be very difficult for international investors,” she says.  

For example, some areas of Angola are littered with land mines, a legacy from its civil war, which intermittently raged between 1975 and 2022. Although the government is taking steps to reduce corruption and improve transparency, Angola still only ranks 121 out of 180 in the Transparency Initiative’s Corruption Perception Index – although it has seen an improvement from 2015 when it scored 15 points versus 33 last year.

Water scarcity is also an issue in the southern part of the country.

“There is definitely many technological challenges, and possibly even infrastructure challenges: you need a lot of power and water, you are going to have to build processing plants because Angola doesn’t have a long history of rare earth elements,” says Richards. “It is all going to need to be explored: can they sustainably process that material? Or are they going to have to chuck it out on the railroad and then ship it somewhere?”

Additionally, Saleem H Ali chair of the Department of Geography and Spatial Sciences and the blue and gold distinguished professor of energy and the environment at the University of Delaware in the US, cautions that any investment in Angola must trickle down to those most in need or there will be “coups, revolutions and alliances will shift”.

Richards agrees on this point. “It can very much look like the foreigners are coming to take your things and that is something that has really got to be worked on in Africa; companies must earn people’s trust.”

However, she adds that investment in the region is poor right now, and overall, it would benefit from international attention. “I think trying to bring down the risk factor of Angola will happen through either government or industry incentives; and you are already starting to see a few companies go in and pioneer that.”