Mining Investment Guide In Angola

1. Introduction

Angola's mining sector has enormous potential for growth and development and is one of the main pillars of the country's economy. With a remarkable diversity of mineral resources, including diamonds, critical minerals such as lithium, cobalt and copper, and base metals, Angola has attracted growing interest from domestic and international investors.

Political stability and recent regulatory reforms have helped to create a favourable environment for investment, promoting sustainable mining operations and maximising the economic value of natural resources.

The Angolan executive has implemented several initiatives to strengthen the mining sector, such as the creation of the National Agency of Mineral Resources ("ANRM"), the completion of the National Geological Plan ("Planageo") and the accession to the Extractive Industries Transparency Initiative ("EITI"). These measures are aimed not only at attracting foreign investment, but also at ensuring that mining is carried out in accordance with international standards of transparency and sustainability.

In addition, the growing modernisation of infrastructure and logistic hubs, fostered by projects such as the Lobito Corridor and the Saurimo Diamond Development Hub, also play a crucial role in facilitating the flow of minerals and in regional economic development.

2. Overview of the Angolan mining sector

2.1. ANGOLA'S GEOLOGICAL POTENTIAL

Angola has significant potential in the mining sector, particularly in the production of diamonds and critical minerals. The country is one of the largest diamond producers in the world, with an estimated annual production of around 8 million carats. Diamonds account for 3-4% of Angola's GDP and are essential for exports, consolidating their position as one of the country's most important products. The Angolan government is determined to consolidate investment in the sector by improving infrastructure and regulation to attract more foreign investment, including the creation of a cutting centre in Saurimo.

Angola also has the potential to exploit critical minerals that are essential for the energy transition, including lithium, cobalt and copper, and is also rich in base metals such as iron and manganese, all with recent discoveries in various provinces. The combination of significant deposits and a favourable regulatory environment represents an opportunity for investors looking to invest in the natural resources sector as a focus for the energy transition.

2.2.MINERAL RESOURCES

The Mining Code establishes the following classification of minerals:

• Ferrous metals, such as iron, manganese, titanium, and chromium;
• Non-ferrous metals, such as copper, lead, zinc, tungsten, tin, nickel, cobalt, molybdenum, and arsenic;
• Rare metals and rare earth elements, such as beryllium, lithium, niobium, and tantalum;
• Radioactive minerals, such as uranium;
• Precious metals, such as gold, silver, and platinum;
• Non-metallic mineral resources, such as quartz, feldspar, kaolin, gypsum, barite, diatomite, wollastonite, muscovite (a type of mica), vermiculite, talc, fluorite, sulphur, kyanite, guano, potash salts, rock salt, graphite, asbestos, phosphorite, and bentonite;
• Construction materials, such as limestone, dolomite, asphaltite, sands, and clays;
• Ornamental rocks, such as anorthosites, granites, and marbles;
• Precious and semi-precious stones, such as diamonds, rubies, sapphires, emeralds, amethysts, and opals;
• Solid fossil fuels, such as peat and lignite.

The Mining Code also establishes 3 sets of rules applicable to minerals extracted in Angola, depending on their category: (a) strategic minerals (b) minerals for civil construction and (c) common non-strategic minerals (residual regime).

2.2.1. Strategic minerals

The legal framework applicable to strategic minerals is that established by law for nonstrategic common minerals, with the adaptations contained in the Mining Code, such as the granting of rights or investment rules.

Strategic minerals are defined as all minerals that, considering their economic importance, are considered important in terms of rarity, size of demand on the international market, impact on economic growth, job creation, influence on the balance of payments, importance for the military industry or technology.

The Mining Code explicitly classifies diamonds, gold and radioactive minerals as strategic minerals. Presidential Decree no. 231/16 of 8 December also classifies rare metals and rare earth elements as strategic. Rare metals include metallic elements with significant technological applications and are used in clean technologies (i.e. critical minerals), such as lithium. Rare earth elements include a group of 17 chemically similar metallic elements such as scandium, yttrium and lanthanides.

Mining rights over strategic minerals can be awarded exclusively to the National Concessionaire (i.e. ANRM). However, the rule has been, and continues to be, the allocation of mining rights to concessionaires set up between the state and investors. In other words, the mining project ends up being developed by joint ventures set up between the state entity and the investors, under terms and conditions to be agreed in the Mining Investment Contract and other ancillary documentation. When it comes to diamonds, the public entity that is part of the concessionaire is Endiama, which thus ensures the State's presence in the concessions, in partnership with the private investors

2.2.2.Minerals for civil construction

The legal framework applicable to minerals for civil construction is in the law on nonstrategic common minerals, with the necessary adaptations, particularly the concession area and the mining rights' duration.

The Mining Code establishes that a mineral for civil construction is any substance of mineral origin used directly in civil construction works or as a raw material for the manufacture of products intended for civil construction.

Mining rights for the prospecting or mining of minerals for civil construction may only be granted to Angolan citizens or legal entities governed by Angolan law that are either wholly owned by Angolan citizens or have at least two-thirds of their capital held by Angolan nationals.

2.2.3.Non-strategic common minerals (residual regime)

Minerals not classified as strategic and not subject to the civil construction materials regime are considered common minerals, which is the residual regime provided for in the Mining Code.

2.3. STRUCTURE OF THE MINING SECTOR

2.4. KEY STAKE HOLDERS

• National Agency for Mineral Resources (ANRM): is the public body that regulates and supervises the mining sector and establishes guidelines for the exploitation, commercialisation and supervision of mineral activities.
• Geological Institute of Angola (IGEO): is the public institution that guarantees geoscientific knowledge and Angola's mining potential through geological research and mapping.
• National Diamond Trading Company of Angola (SODIAM): is the public company that supervises and controls the commercialisation and cutting of diamonds.
• National Diamond Company (ENDIAMA): is the public company that operates in the prospecting, research, reconnaissance and exploitation of diamonds.
• National Commission for the Kimberley Process (CNPK): is the body that supervises the implementation of the Kimberley Process and ensures compliance with international regulations on the commercialisation of precious metals and diamonds.

2.5. ANGOLA'S ROLE IN THE ENERGY TRANSITION

Angola has an enormous potential in critical minerals. These minerals include lithium, cobalt, copper and graphite, which are fundamental to the energy transition and the production of advanced technologies such as batteries for electric vehicles. The Angolan government has emphasised the importance of developing not only the extraction of these resources, but also their value chain within the country, promoting a sustainable development model that benefits the local economy.

In recent years, Angola has restructured itself to attract investment in the sector. Investor confidence has increased due to political stability and a more robust regulatory model. This momentum is seen as a generational opportunity for Angola as it seeks to position itself as a reliable supplier of critical minerals in a global context.

Energy transition is a key focus of the Angolan government's strategy. With demand for critical minerals increasing due to the growth of renewable energy, Angola is preparing to start production of neodymium and praseodymium in the coming years. As the national executive has stated, investment in critical minerals is not only an economic issue, but also a strategic necessity for the country's sustainable future

2.6. PLANAGEO

The National Geological Plan (Planageo), which was completed in 2023, plays a key role in the development of Angola's mining sector by providing a detailed map of the country's mineral resources. This ambitious programme not only identifies deposits of strategic minerals such as copper, iron, diamonds and rare earths, but also makes this information available to potential investors.

By reducing geological uncertainty and creating a comprehensive database, Planageo facilitates informed decision-making and attracts new investment to the sector, reinforcing Angola's position as a promising destination for mining projects.

The data collected is the responsibility of the Geological Institute of Angola (IGEO), a public organisation under the supervision of the Ministry of Natural Resources, Petroleum and Gas ("MIREMPET").

2.7. THE EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE

The Extractive Industries Transparency Initiative (EITI) is a global standard for good governance of natural resources that promotes transparency and accountability in the management of revenues from extractive industries such as oil, gas and mining. EITI requires the disclosure of information throughout the extractive value chain, from the granting of licences to the use of revenues, with the aim of reducing corruption, promoting informed public debate and ensuring that resources benefit local communities. The initiative operates within a tripartite framework involving governments, companies and civil society.

Angola joined the EITI in June 2022, demonstrating its commitment to transparency in the extractive sector. This strategic step aims to strengthen governance and responsible management of Angola's natural resources, improve the business environment, attract investment and fight corruption. In 2023, Angola presented its first EITI report for 2021, demonstrating its efforts to meet the initiative's requirements and providing an important transparency exercise to mobilise investment by providing a detailed mapping of the country's mineral resources 

2.8.THE LOBITO CORRIDOR

The Lobito Corridor is a strategic axis for Angola's mining sector, providing a vital link between the mineral rich regions of inland Angola and global markets. The railway corridor connects the province of Benguela on the coast of Angola to the border with the Democratic Republic of Congo (DRC), via Zambia. This provides an efficient route for the transport of critical minerals such as copper, cobalt and rare earths mined in Zambia's Copperbelt region. This infrastructure significantly reduces transport times and logistics costs, supporting the growth of Angola's mining sector and facilitating the export of minerals essential to the country's high-tech and renewable energy industries.

In addition, the Lobito Corridor is seen as an engine of economic development for Southern Africa, attracting foreign investment and promoting regional cooperation. The modernisation of this route, with the support of international partnerships, aims to transform Angola into an export hub for critical minerals, promoting sustainable growth and economic diversification. With growing global demand for minerals needed for the energy transition, such as lithium and cobalt, the Lobito Corridor plays a vital role in positioning Angola on the global stage for the supply of these resources.

3. Granting of mining rights

Mining rights may be granted by public tender or at the request of the interested party. If there is no public tender, the mining rights are granted to the first applicant.

The Mining Code provides that a public tender is mandatory: (i) if the area has a high geological potential or (ii) if it is a strategic mineral.

The general procedure for granting mining rights for industrial production is as follows:

1. Submission of an application to the Minister of Geology and Mining, which is received by the Minister's office ("GABMIN");
2. Response to the application for a mining concession, which must be issued within 30 days of the submission of the application;
3. Issuance of the Certificate of Registration of the Mining Concession Application ( CRPCM) within 15 days of proof that the mining concession application is valid and unchallenged;
4. Formation of the Negotiating Committee - within 30 days of the submission of the Letter of Intent by the investor, accompanied by the CRPCM or the Technical, Economic and Financial Feasibility Study and, if required, the Environmental Impact Study;
5. Negotiation of the mining investment contract - up to 180 days after the negotiation committee is established;
6. Drafting of the minutes of the negotiations and submission to the competent authority for approval of the contract - up to 8 days after the conclusion of the negotiations;
7. Approval of Contract by Minister or by the President of the Republic, depending on the value of the contract, once the negotiation report has been received and the Contract initialled
8. Provision of security by the investor; and
9. Issuance of the mining bonds, up to 8 days after the approval of the contract.

Main stages in the process of granting mining rights

3.1. MINING INVESTMENT CONTRACTS

The Mining Investment Contract – (MIC) is an essential instrument for formalising and regulating the relationship between the investor and the state in mineral resource projects. The contract plays a crucial role in defining the terms and obligations of all parties, ensuring a clear legal framework and providing legal and economic security for the investment.

It is usually approved by the minister in charge of the mining sector ("MIREMPET"), except when the value of the investment exceeds USD 25 million. In such cases, the President of Angola is responsible.

Although investment in the mining sector is regulated by specific legislation, the Private Investment Law, approved by Law no. 10/18, of 26 June, as amended, applies subsidiarily to investments made in the mining sector. Thus, after the mining title has been issued, the foreign investor must register with Investment and Export Promotion Agency (AIPEX), and the application must be accompanied by a copy of the MIC, the prospecting title and the relevant company documents.

3.2.KEY ANNEXES OF THE MINING INVESTMENT CONTRACT (CIM)

The submission of the initial proposal for the Mining Investment Contract (MIC) must include its various annexes, with the most important highlighted here:

1. Tax annex: contains the tax incentives applicable to the investors and the concessionaire. The request for tax incentives shall be addressed to the Minister of Finance, after hearing the opinion of MIREMPT. The incentives are discussed and negotiated with Negotiating Committee which shall include representatives of the Ministry of Finance.
   
   This is an especially important document, as it requires flexibility in the negotiation of incentives, both in terms of the tax rates that can be reduced or even eliminated, the duration of the incentives and the investment premiums (uplift). However, the investor must prove the added value of the project, particularly compliance with Article 353(3) of the Mining Code.
   
   Most importantly, it is highly advisable that the MIC defines when the incentives start to count, ensuring an effective benefit to the investor.
   
   
2. Social responsibility: One of the major strategic objectives of the mining sector is to guarantee the sustained economic and social development of the country, as well as to create jobs and improve the living conditions of the populations living in the mining areas.
   
   The social responsibility of mining is the commitment to proceed with mining that goes beyond the sphere of job creation, tax payment and business profitability. Projects must show an ethical attitude in favour of quality of life and respect for human rights, which begins with their own employees and extends to the whole of society, especially the local communities involved.
   
   
3. Human resources development plan: the human resources development plan is an essential element in the MIC, ensuring that the exploitation of natural resources contributes to the empowerment of the local workforce and sustainable economic development. This plan defines priority recruitment of Angolan workers, technical training programmes and knowledge transfer, reducing dependence on foreign labour and strengthening local skills.
   
   The plan should create a positive impact on communities by creating job opportunities, improving quality of life and stimulating the local economy. By aligning the interests of investors with the priorities of the Angolan government, the human resources plan promotes social inclusion and ensures that the benefits of mining projects have a direct positive impact and contribute significantly to the sustainable development of the region.

4. Statutes of the mining company (concessionaire): the MIC must also be submitted with a proposal for the statutes of the mining company, which will act as the concessionaire and holder of the mining rights. The document regulates the rights and duties of the parties and must be drawn up in accordance with the Companies Law.
5. Shareholders' agreement: although this is not a compulsory element - and in many cases it is not included as an annex - it is desirable that the shareholders' agreement relating to the mining entity is agreed from the outset.
   
   Attaching this document to the CIM promotes transparency, protects the interests of the parties and reinforces the stability of the project, ensuring that no future negotiations are necessary on important issues such as governance, company financing and dividend policy.
   
   
6. Plan to combat illegal mining: this is an annex that the ANRM / Negotiating Committees have recently requested from investors, which should include the main measures that the investor intends to develop to combat illegal mining activity. Specifically, the investor is asked to indicate which preventive and reactive policies and actions will be developed throughout the life of the project to mitigate the consequences of the illegal mining phenomenon.

3.3. STATE PARTICIPATION AND LOCAL CONTENT

The state assumes a central role in the regulation of mining activities, and it holds a direct financial interest in these activities. Through regulatory bodies and public companies, the state ensures that mining activities comply with established laws and regulations, thereby guaranteeing the sustainability and development of the sector. This role can be enhanced by the creation of new public institutions, where necessary, to manage specific aspects such as export controls, pricing and public health protection.

In addition to its regulatory role, the State participates directly in mining projects as a form of compensation for granting exploration and commercialisation rights. This participation can take the form of a shareholding in the mining company, with a minimum presence of 10% in the share capital of the concessionaire.

Alternatively, or cumulatively, the State can benefit from participation in kind, i.e. receiving a share of the mineral product extracted, the proportion of which can increase as the profitability of the mining project becomes higher. This model under which the state holds a financial interest aims to ensure that Angola receives fair compensation for the exploitation of its natural resources, while providing investors with a clear and predictable environment in which to develop mining projects. In this way, the country seeks to balance its strategic interests with the need to attract and retain international investment in the sector.

The State is required to hold a minimum 10% participation in the concessionaires.

Moreover, despite the direct interest held by the State in the concessionaires, it is unusual for the State entity to bear any financial burdens related to the development of the project, as these are typically the responsibility of the investor (i.e. carry). Therefore, it is important for the Mining Investment Contract to include provisions regarding the responsibility of the project concessionaire to capitalise the project, as well as the framework applicable to the repayment of the investment (e.g., priority of repayment of the investment over dividend distributions).

As a general rule, there are no restrictions based on the nationality or residence of investors in mining projects involving strategic minerals. However, when mining rights are granted under equal conditions, preference should be given to projects backed by national citizens.

The exception in the previous paragraph concerns mining rights for the semi-industrial exploitation of diamonds and minerals for civil construction. This right can only be granted to Angolan nationals or to legal entities established under Angolan law and owned exclusively by Angolan nationals, with at least two-thirds of the capital held by Angolans.

Additionally, there are regulations regarding the local contracting of services, requiring concessionaires to prioritize local products and services when: (i) their price does not exceed that of a foreign competitor by more than 10%, and (ii) their delivery time does not surpass that of a foreign supplier by more than 8 days. Therefore, it is always advisable for concessionaires to request proposals from local suppliers and maintain a record of this documentation, should it be necessary to justify international contracting under tax, exchange, and customs regimes.

4. Tax, exchange and customs rules

Taxation of mining projects

The taxation of each MIC can be negotiated and implemented on a contractual basis. As part of the contractual phase of the investment process, investors may propose to the Negotiating Committee any exemptions or other facilities of a tax and/or customs nature that they consider appropriate. This proposal is then subject to discussion, negotiation and approval.

Among the various other possible tax incentives that can be granted to holders of mining rights, we can highlight here the granting of investment bonuses (uplift), as well as tax rate reductions or grace periods in the payment of income tax.

The Mining Code identifies three main tax charges to which mining companies are subject:

1. Income Tax: a rate of 25% levied on profits attributable to the exercise of domestic or foreign activities that have acquired mining rights;
2. Tax on the value of mineral resources or royalty: This is levied on the value of minerals extracted at the mine mouth or, where processing takes place, on the value of the concentrates. Rates vary from 2% to 5% of the value of mineral resources;
3. Surface levy: This levy applies to holders of granted prospecting rights and is based on the area of the concession. It is paid annually, and the amount is calculated per square kilometre of the area covered by each concession.

However, the General State Budget for 2024, whose continuity is guaranteed by the General State Budget for 2025, reintroduced the Special Contribution on Foreign Exchange Operations (CEOC), which applies to foreign currency transfers abroad made by individuals (2.5%) and legal entities (10%). This includes contracts for services, technical assistance, consultancy, management, capital transactions and unilateral transfers.

To view the full article, click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.