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Mining Code 2011

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  • GDP, US$bn: 96.8
  • GDP per capita, US$: 3,358.0
  • Population, mn: 25.0
  • Inflation, CPI ave: 28.2
  • FX, LCY/US$: 165.9
  • Budget Balance, % of GDP: -4.9
  • Mining GVA, US$bn: 26.4
  • Mining Industry Value, US$bn: 0.9
Regulatory Risk Rating
49
0
100
Score: 49
Substantial Risk
Given Angola’s historical reputation for corruption it will be necessary to evaluate the jurisdiction with caution but those with an appetite for risk may find the regulatory environment appealing – with the negotiation of a Mining Investment Project a real make or break factor for any investment. Project specific risk would need to be assessed on the basis of such contract and it will be imperative to negotiate such agreement effectively in order to limit the State’s ability to interfere, influence or control activities in the country.

Corruption Potential Index

Score: 45
Moderate Corruption Potential

Corruption Risk Index

Score: 39
Very High Corruption Risk

Regulatory Risk Rating

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Mining Overview Commentary plus sign

GENERAL

Angola, officially the Republic of Angola, is located on the western coast of Southern Africa, bordered by the Democratic Republic of Congo to the north and east, Zambia to the east, Namibia to the south and the Atlantic Ocean to the west.

Once a former Portuguese colony, Angola gained independence in 1975; however civil war continued in the country until 2002 as the People’s Movement for Liberation of Angola (MPLA) and the National Union for the Total Independence of Angola fought for control of the country. The country’s former president – José Eduardo dos Santos – led the MPLA from 1975, serving as president from 1979 until his retirement in 2017. His 38-year term made him the second longest serving president in Africa. During his time in office Dos Santos faced multiple accusations of corruption and nepotism and was seen to lead one of the most corrupt regimes in Africa. The MPLA successfully retained power during the 2017 elections, with new president João Manuel Gonçalves Lourenço assuming office in September of that year.

Angola’s economy is heavily reliant upon the country’s natural resources wealth. It is the second largest oil producer in Africa after Nigeria, with the industry contributing over 40% of GDP and over 90% of total exports. Diamonds are also a main export, with the country producing around 7% of the world’s rough diamond output (USGS, 2013). Other known mineral resources include cement, granite, gypsum, limestone and marble (USGS). Since the end of the civil war, Angola’s economy has experienced rapid growth, although the decline in oil prices in recent years has had a considerable impact on the country’s economic forecast. The impact caused by falling oil prices provided momentum for the country to diversify its economy away from oil and, according to recent reports from the IMF, these efforts have proved relatively successful.

PRINCIPAL LEGISLATION AND REGULATOR

In 2011, Angola promulgated a new Mining Code (MC) - Law No. 31/11 (Código Mineiro – Lei No. 31/11). The MC outlined new strategic goals for the Angolan mining industry, such as ensuring the country’s sustained economic and social development; creating jobs and improving the standard of people’s lives in mining areas; supporting and protecting the private business community; and motivating reinvestment in the country (Art. 8, MC). The MC regulates all geological-mining activity and the rights and obligations relating to it (Art. 1, MC). It is worth noting that separate legislation applies in relation to the exploration and mining of liquid and gaseous hydrocarbons (see. Arts. 1 – 3, MC). Other laws of relevance to the sector include the Private Investment Law (Law No. 10/18) (PIL); the General Environmental Law 1998 (GEL); the Environmental Licensing Decree 2007; and the Environmental Impact Assessment Decree 2004. There are also numerous industry specific decrees and orders including Decree No. 231/16 which categorises rare metals and rare earth elements as strategic; Decree No. 158/16 on administrative offences and penalties; Decree No. 316/17 on customs exemptions for mining equipment; and Order No. 2/03 on the foreign exchange regime for diamond and mineral producers.

The central administrative body for the mining industry in Angola is the Ministry of Mineral Resources and Petroleum (Ministério dos Recursos Minerais e Petrólos (MIREMPET)), headed by the Minister of Mineral Resources and Petroleum (Minister). The Geological Institute of Angola (Instituto Geológico de Angola (IGEO)) is the responsible body for geological mapping and surveys as provided for under Arts. 29 – 33, MC).  MIREMPET also works in conjunction with the Ministry for the Environment (Ministério do Ambiente (MINAMB)) on the EIA process and environmental licensing. Those with interest in Angola should also be aware of the national concessionaire - ENDIAMA (Empresa Nacional de Diamantes de Angola) – the sole concessionaire for the diamond industry, with whom joint ventures or other agreements may be required for the exploitation of diamonds in the country.

GRANTS AND FORMS OF MINERAL TITLE

Natural persons over the age of 18 or legal persons, both national and foreign, with adequate technical and financial capacity, may obtain mining rights in Angola (Art. 96, MC; see also Art. 90, MC) providing they are not prohibited from doing so under the criteria stated in law (Art. 96(2), MC).

The following mineral rights must be acquired in order to conduct mining activities:

 

  • Mining Concession: Obtained via public tender or on application (Arts. 98-104, MC). Tenders are to be carried out in accordance with the relevant public tender rules and procedures and shall be mandatory where rights are for strategic minerals or over an area with enhanced geological potential (Arts. 98-99 & 159, MC). Applications for a Mining Concession must be submitted to MIREMPET and accompanied by certain documentation, including evidence of financial and technical capacity, a commitment to meet environmental requirements, information on economic goals and a provisional budget (Art. 101, MC). A public notice period shall apply to the granting of Concessions during which complaints and challenges may be made (Arts. 104 – 105, MC).

 

  • Mining Investment Contract (MIC): Following the acquisition of a Mining Concession, a MIC must be negotiated. The MIC will set out the rights and obligations for the investment over three phases – reconnaissance and prospecting, detailed exploration and mining - in a single contract (Art. 111, MC; see also Art. 113, MC). MIC are negotiated with a Contract Negotiations Committee and the national concessionaire if rights concern strategic minerals (Art. 112, MC). For investments over $25 million USD, approval of the Angolan President will be required (Art. 111, MC). A performance bond is required prior to the signing of a MIC (Art. 62, MC).

 

  • Prospecting Title: Issued following the approval of an MIC after the payment of applicable fees and taxes (Art. 126, MC). An Investment Letter of Intent must be submitted prior to the prospecting phase and must include a programme of work (Art. 115, MC). Detailed information on the prospecting rights will be set out under the MIC and will include information such as the mineral to which rights relate, terms for renewal, reporting requirements and various fiscal terms. The law also requires that a prospecting plan be submitted, approved and appended to the MIC (Arts. 119, 121 & 122, MC). Rights are granted for an initial period of up to five years, extendable to a maximum total duration of seven years (Art. 125, MC). Land shedding requirements may apply at renewal (Art. 125, MC).

 

  • Mining Title: Required prior to the commencement of the mining phase under the MIC (Arts. 113 & 128, MC). Mining Titles shall be granted for the mineral(s) discovered during prospecting, providing the terms and conditions of the Prospecting Title have been met. Prior to obtaining the title, Concession holders must complete a Technical, Economic and Financial Feasibility Study (EVTEF), an EIA and present a Mine Plan (Arts. 116 & 142, MC). Requirements for the EVTEF and Mine Plan are set out under the law (see Arts. 129 & 143, MC). For mining investments involving foreign capital, a Private Investment Registration Certificate and Capital Importation Licence must be obtained (Art. 136, MC). The law does not provide a specific duration for a Mining Title but allows for rights to be granted for up to 35 years, including the prospecting phase (Art. 133, MC). Rights may be extended for further 10-year periods on application. A second performance bond will be required at the mining phase (Art. 62, MC).

 

The MC provides rights holders with certain guarantees (Art. 91, MC) and the rights and obligations of titleholders are also explicitly stated (Arts. 92-93, MC). Titles may be transferred and pledged in accordance with the legislation (Arts. 94 & 50, MC).

The MC also provides for other rights relating to small-scale mining (Mining Pass) and the mining of civil construction minerals (Mining Permit) (see Arts. 89 & 101, MC).

DEVELOPMENT CONSIDERATIONS

The State may classify minerals as strategic on the basis of pre-defined criteria (Art. 20, MC). At the time of writing (April 2020) diamonds, gold, radioactive minerals, rare earth elements and rare metals are all classified as strategic minerals (Decree No. 231/16). Pursuant to Article 23, MC, rights to prospect, mine, process and trade in strategic minerals may be awarded in exclusivity to a specific national entity which shall undertake the role of national concessionaire of such rights.

Land in the public domain of the State may be used for certain mining related purposes subject to the payment of surface fees (Art. 72, MC). In the case of privately-owned land, an agreement must be reached with the landowner(s) / holder(s) on compensation and access, with a determination from MIREMPET possible in the absence of agreement (Arts. 72 & 77, MC). Local populations may also be entitled to relocation (Art. 17, MC).

In terms of fiscal considerations, State participation rights and royalty rates are set out under the law (see Arts. 11 & 257, MC). A range of bonds and financial guarantees are also provided for, including a statutory reserve for closure and reclamation and a guarantee for environmental rehabilitation. Bond amounts and requirements may form part of the MIC, Prospecting or Mining Title.

Various community, procurement and employment obligations are provided for under the MC. Consultation mechanisms must be established for local communities (Art. 16, MC). Preference must be given to Angolan workers and to the use of national materials, services and products (Arts. 17-18, MC).

Numerous actions require government approval under the MC including amendments to Mine Plans, the suspension or reduction of production / activities, changes in forecasts and work levels and the assignment of rights. Monthly, quarterly and annual reporting requirements are also outlined – with specific information on reporting provided for in the MIC or respective title (Art. 151, MC).

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Environmental Overview Commentary plus sign

GENERAL

Angola sits on the western side of the Southern part of the African continent, bordering the Democratic Republic of Congo, Zambia, Namibia and the Atlantic Ocean. With a total area of almost 1.2 million km2, Angola is the 23rd largest country in the world and the 7th largest country in Africa.

Angola’s landscape can be divided into four main areas: rainforest in the northern region; a high plateau in the east characterised by dry plains; a region of hills and mountains in the central area, with the Great Escarpment in the central south-west; and a dry coastal area of lowlands in the south and west, including parts of the Namib desert at the base of the country. Angola’s climate is described as subtropical, with both dry and rainy seasons experienced throughout the year at different times in the various ecoregions. Notable landmarks in the country include the Kalandula and Ruacana waterfalls, two of Africa’s largest by volume and width, respectively and the Quiçama National Park – the only national park in the country.

Angola’s national animal is the giant sable antelope. Angola is also home to lions, leopards and larger animals such as elephants and giraffes, though the country’s civil war had a severely damaging impact on its wildlife. Gorillas and chimpanzees are considered endangered in Angola due to issues with illegal poaching. The country’s national plant is the Welwitschia, which is found in Angola’s desert region. Other native flora includes the African baobab, commonly found in the Mayumbe forest, eucalyptus, pine and cypress trees and various species of grass plants, including the Angolan streptolophus, commonly found in the grasslands and savannas.

Current environmental issues include desertification, water purification problems and deforestation.

PRINCIPAL LEGISLATION AND REGULATOR

The environmental laws and regulations relevant to the mining industry in Angola include: the General Environmental Law 1998 (GEL); Decree No. 51/04 on Environmental Impact Assessment (EIA) (EIA Decree); Decree No. 59/07 on Environmental Licensing (Licensing Decree); Decree No. 96/09 on Environmental Licence Fees; Decree No. 09/11 on Establishing an Environmental Fund; Decree No. 92/12 on Terms of Reference for the EIA; and Decree No.87/12 on Public Consultations. The Mining Code 2011 (MC) itself also contains provisions relevant to environmental protection, the EIA process and rehabilitation / reclamation.

Environmental matters in Angola are overseen by the Ministry of the Environment (Ministério do Ambiente (MINAMB)) headed by a Minister of the same title (Environmental Minister). Under the terms of the EIA Decree, the EIA is overseen by both the MINAMB and the Ministry of Mineral Resources and Petroleum (MIREMPET) (Art. 11, EIA Decree). The MINAMB shall carry out the EIA process and forward an opinion to the MIREMPET prior to the licensing of any project (Art. 13, EIA Decree).

EIA PROCESS

Generally speaking, holders of mining rights are under an obligation to promote the conservation and protection of nature and the environment, complying with the requirements of environmental laws and regulations (Art. 64(1), MC). During exploitation, rights holders are also under an obligation to observe basic laws on the environment, biological and aquatic resources, waters, and standards for assessing environmental impact (Art. 64(2), MC).

Article 65, MC requires that an EIA be conducted and approved as a precondition for obtaining a Mining Title (Art. 65(1), MC). In addition, the EIA Decree requires an EIA assessment for those activities listed in the Annex, which in the case of mining, includes deep drillings, extraction of metallic minerals, open cast mining of certain other minerals, large scale ore extraction and the installation of various facilities (see Art. 4 & Annex, EIA Decree). The GEL also mandates the completion of an EIA project for all undertakings which have an impact on the balance and well-being of the environment and society (Art. 16, GEL), requiring environmental licensing prior to the issuance of project specific rights (Art. 17, GEL).

EIA and Project Approval

The EIA process must be completed only be companies and professionals registered with the State (see Arts. 29 – 31, Licensing Decree). It should be noted that, under the terms of the MC, the principle of tacit approval of an EIA shall not apply to mining projects (Art. 65(2), MC).

In the first instance, an Environmental Impact Study (EIS) must be carried out and submitted to the MINAMB via the MIREMPET (Art. 4-5, EIA Decree). The EIA Decree requires that the EIS contain: a description of the project; the EIS report; technological and alternative locations for the project; assessment of the environmental impacts at each project stage; the area to be impacted; the compatibility or existence of other government plans and programmes in the area; and any other important information (Art. 6, EIA Decree). The decree also sets out minimum technical assessment requirements for the EIS, which include:  

  • An environmental diagnosis of the project area which considers the physical environment, biological environment and natural ecosystems and the socio-economic environment;
  • Analysis of the environmental impacts of the project and any alternatives including positive and negative impacts, the duration of such impacts, the potential to reverse such impacts and the distribution of the social burden and benefits;
  • Mitigation measures for negative impacts; and
  • A programme for monitoring the environmental impacts (Art. 7, EIA Decree).

 

Additional guidance on the EIS can be found under Decree No. 92/12 which provides Terms of Reference (TOR) for the study. Specific TOR applicable to each individual project are approved by the Environmental Minister (Art 2, Decree No. 92/12). A model TOR is provided in Annex III of Decree No. 92/12.

After submission of the EIS, a public consultation must take place for a period of between five to ten days (Art. 10, EIA Decree; see also Art. 9, Decree No. 87/12). Decree No. 87/12 provides terms for public consultations, with the aim of ensuring that public opinions are collected, rights and interests are protected, information is disclosed, and any relevant opinions or complaints are considered (Art. 3, Decree No. 87/12). Consultations are carried out during a public session, overseen by a committee including a President, Secretary and Rapporteur (Arts. 4-6, Decree No. 87/12). Registration for consultations is open to the public, who can present questions and comments orally and in writing (Arts. 10-11, Decree No. 87/12). Consultations shall begin with the publication of the non-technical summary of the EIS, describing the most important impacts the project may have on the environment (Art. 8, Decree No. 82/12). The minutes of any consultation shall be signed by the committee and form a basis for the technical opinion on the licensing of the project (Art. 13, Decree No. 87/12). A report shall be prepared within eight days of a consultation detailing participation, next steps and any conclusions (Art. 15, Decree No. 87/12; see also Art. 10, EIA Decree). 

The EIS and consultation forms part of the wider EIA process. The EIA Decree sets out general documentation requirements for the EIA, with similar terms found under the GEL. Pursuant to Article 9, EIA Decree, the EIA documentation must include: a non-technical summary of the project; a description of the planned activities; a general description of the environmental situation in the planned location; a summary of the opinions and criticisms collected through the public consultation; a description of the possible environmental and social changes the project may cause; an indication of the measures to eliminate or minimise such changes; and an indication of the systems for monitoring and controlling environmental impacts (see also Art. 16, GEL). The environmental laws and decrees are supplemented by requirements under the MC, which provides additional requirements for an EIA for mining activities. Alongside the aforementioned documentation, the MC requires that an EIA include: an environmental management plan; an environmental monitoring programme; environmental audits; rehabilitation programmes; site abandonment plan; environmental financial costs; a financial guarantee for environmental costs; plans for water use; waste management plans; and provisions for the control of dangerous substances (Art. 66, MC).

Within 90 days of receipt of the environmental documentation, the MINAMB shall forward its opinion on the project to the MIREMPET, along with the report from the public consultation (Art. 12, EIA Decree). As noted above tacit approvals shall not apply in relation to mining projects (see Art. 65(2), MC with reference to Art. 12(2), EIA Decree). The legal framework is lacking clear criteria upon which MINAMB’s opinion shall be based. Should the MINAMB issue a negative opinion, the project shall not be licensed (Art. 13(1), EIA Decree). Appeals are possible via the administrative courts on the general terms of administrative procedure (Art. 13(2), EIA Decree). Decisions on projects are publicly announced (Art. 14, EIA Decree).

Environmental Licence

Following the completion and positive approval of the EIA, an Environmental Licence must be obtained prior to the issuance of a Mining Title (Art. 17, GEL). Licences are issued by the MINAMB on application (Arts. 4-5, Licensing Decree). The application must include: a description of the installation, the nature and extent of its activities; a certificate from the Provincial Government, stating that the location and the installation / activity are in conformity with the relevant legislation; a non-technical evaluation of the EIS; a binding opinion on the project from the MIREMPET; and the EIA report (Art. 6, Licensing Decree).

The MINAMB must reach a decision on licensing within 90 days (Art. 8, Licensing Decree). Licences may be refused on various grounds, including where the activity: does not meet the requisite standards and requirements in relation to pollution, health and safety etc.; endangers the public health or environment; creates excessive levels of pollution; or does not have an EIA (Art. 15, Licensing Decree). The report detailing the decision on licensing must contain a summary of the factual and legal reasons for the decision (Art. 7, Licensing Decree).

If the licence application is successful, the proponent will receive two licences in succession (Arts. 11-13, Licensing Decree) - an Environmental Installation Licence followed by an Environmental Operating Licence. The Installation Licence authorises the work set out in the approved project description (Art. 12, Licensing Decree). The Operating Licence is issued after an audit to ensure the terms and requirements of the EIS are being satisfied (Art. 13, Licensing Decree). The Operating Licence will include various information including best practice methods and techniques, emission limit values and monitoring terms, protective measures and information on waste management, and obligations relating to environmental incidents (Art. 14, Licensing Decree).

The Operating Licence is valid for between three to eight years (Art. 14(g), Licensing Decree). A licence is renewable subject to an audit and notification of any changes that are not included in previous descriptions (Art. 16, Licensing Decree). Fees are payable prior to the issuance of each licence type with rates based on a percentage of investment, a 20% rate increase applies for mining activities (see Annex, Decree No. 96/09).

Licences may be suspended or revoked in certain circumstances, including where the licensed activity is not carried out or the facilities are unused without justification for a period of one year or more (Art. 18, Licensing Decree). Licences are non-transferable (Art. 19, Licensing Decree).

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