Angola critical minerals are key investment amid growing UAE ties

The UAE’s investments in Angola are expected to increase in sectors such as mining and critical minerals, energy transition, maritime logistics and agriculture as the two countries continue to strengthen ties. The UAE currently invests heavily in Angolan ports, clean energy, property, defence and agriculture. DP World, AD Ports, Masdar, defence conglomerate Edge and Dubai Investments are among the companies that have invested into the African country, starting about three years ago. “Emirati investment in Angola accelerated in 2021, as the Angola-UAE Bilateral Investment Treaty entered into force that year,” Albert Vidal Ribe, a research analyst at the International Institute for Strategic Studies told The National. The investment increased as Angola emerged from a recession after the pandemic-induced slowdown and low oil prices. The Angolan government also focused on privatisation of its assets to attract more investment into the country. “Provided there is no significant economic downturn … Emirati companies will likely continue investing in sectors such as maritime logistics, energy infrastructure and food and agriculture,” Mr Ribe said. DP World is investing $190 million to develop the Port of Luanda and increase its capacity, while AD Ports signed an agreement earlier this year to operate and upgrade the existing Luanda multipurpose port terminal with a total investment of $251 million. DP World's modernisation of the multipurpose terminal at the Port of Luanda is expected to be completed by the end of next year, and includes the construction of new customs offices equipped with scanners to examine cargo carried by containers that dock at the terminal, as well as other improvements at the port, Paco Pinzon, chief executive of DP World Luanda, told The National. Dubai Investments, a diversified company in which sovereign wealth fund Investment Corporation of Dubai holds a stake, is also building an integrated economic zone near Luanda, with commercial, residential and industrial units, as part of the company’s global expansion plans. The construction of the project covering 2,000 hectares in Dande province started in June and is aimed at “supporting and helping Angola’s economic landscape with advanced infrastructure”, said Khalid Bin Kalban, vice chairman and chief executive of Dubai Investments. Abu Dhabi's clean energy company Masdar also plans to develop a 150-megawatt solar power plant in Angola that will provide electricity to 90,000 homes and displace more than 224,000 tonnes of carbon emissions every year. The project is located in Quipungo region of the country. Other deals include Abu Dhabi Ship Building‘s €1 billion ($1.06 billion) deal to supply three 71-metre corvettes and other ships to the Angolan navy. The agreement was signed during the International Defence Exhibition and Conference in Abu Dhabi last year. ‘Angola is a very important market for Edge, not only for our current naval programme, but as a growth market, and will continue to be a market that we are active in and support,” an Edge representative said. The total investment by the UAE into Angola from 2018 to early last year covers 32 projects and is estimated at $371 million, Mr Ribe said, quoting a report by Angola’s Private Investment and Export Promotion Agency. There are also other agreements including a $122 million investment to support Angola’s IT sector and street lighting in various cities by Abu Dhabi Exports Office and a $251 million investment by AD Ports. Last year, Adex, the export financing arm of the Abu Dhabi Fund for Development, signed two green finance agreements with the government of Angola to support the country’s IT sector and infrastructure projects. One agreement, worth Dh330 million ($90 million), relates to the acquisition of an analytical platform, main data centre, backup data centre and national cloud platform to strengthen the Angolan IT sector, while the other agreement valued at Dh115 million is related to installation and maintenance street lights in the cities of Luanda, Malanje, N’dalatando and Uige. UAE investment in Angolan infrastructure and defence is helping to open new possibilities for wider trade between the two countries in key areas. “Mining and critical mineral space will be a key focus area of any growing trade and investment linkages,” said Robert Mogielnicki, senior resident scholar at the Arab Gulf States Institute in Washington. “There’s also lots of room for the UAE to expand into Angola’s agricultural sector as part of the UAE’s globally orientated, multifaceted food security strategy.” In June, the Abu Dhabi Chamber of Commerce and Industry signed a co-operation agreement with the Angola-UAE Chamber of Commerce and Industry to create more investment opportunities for businesses, entrepreneurs and investors in both countries. In July, Mohamed Al Hussaini, Minister of State for Financial Affairs, met Angola’s Finance Minister Vera de Sousa in Dubai and stressed the UAE's commitment to boost bilateral relations with Angola “to higher levels of growth and development”. “The UAE has clearly identified Angola as a strategic investment destination, its copper reserves are likely considered an essential part of facilitating ambitious UAE energy transition plans, particularly around electric vehicles,” said Jack Kennedy, head of Mena country risk at S&P Global Market Intelligence. Copper is a major component in the manufacture electric motors, batteries, wiring and charging stations. Abu Dhabi-headquartered International Resources Holding, which is part of the holding company 2PointZero, is focusing on energy transition minerals and resources such as copper, cobalt, nickel, lithium, tin, tantalum, tungsten, manganese and graphite to boost its portfolio. Last year, IRH signed a $1.1 billion investment agreement for a 51 per cent stake in Zambia's Mopani Copper Mines. The company has more than 20 assets under negotiation and more than 22,000 square kilometres under exploration in various countries. “Outside of trade and mineral resource development Angola also represents a market for Emirati diversification, the government has contracted Edge Group, to construct corvettes for the Angolan navy – representing a significant opportunity for technology transfer and developing expertise,” said Mr Kennedy. Trade ties between the two countries are also expected to grow especially in the area of diamonds. Currently, the UAE is Angola’s primary market for diamonds, absorbing more than two thirds of Angolan diamond exports. In 2022, Angola sold a total of 8.8 million carats of diamonds valued at about $1.95 billion, according to its Ministry of Mineral Resources, Oil and Gas, while the Observatory of Economic Complexity reports that Angola’s diamond exports amounted to $5.02 billion for the same year. “Despite these differences, both sources agree that the UAE imported around 67 per cent of Angola’s diamond exports, which would account for $1.3 billion based on the Ministry’s figures, and $3.3 billion according to the OEC,” Mr Ribe said. He added that trade will continue to grow between the two countries. They could also “decide to start negotiations for a comprehensive economic partnership agreement, something the UAE is currently pursuing with numerous countries”. The UAE has already signed Cepas with India , Turkey , Israel , Indonesia , Cambodia , Georgia , Chile and Mauritius, while talks are under way with a number of other countries as it aims to boost non-oil trade to Dh4 trillion by 2031. Angola is one of the most oil-dependent African countries, with crude accounting for 28.9 per cent of its gross domestic product and 95 per cent of its exports, according to the African Development Bank Group. However, the country also relies on foreign direct investment to support economic growth. The short-term economic outlook for Angola is supported by large foreign investments in infrastructure, oil and gas and mining, raising real gross domestic product growth prospects to about 3 per cent for the coming years, according to Belgian export credit agency Credendo. Angola’s medium to long-term political risk classification – which represents the solvency of a country (measured in relation to the ratio of total debt to GDP) – is in the second highest risk category 6/7, Credendo, said. Angola’s short-term political risk classification – which represents the liquidity of a country – has been in category 5/7 since 2021, when higher global oil prices drove the economic recovery after five years of recession, resulting in substantial current account surpluses. In June, Fitch Ratings affirmed Angola's long-term foreign currency issuer default rating at B- with a stable outlook. The ratings indicate the country is currently meeting financial commitments but the capacity for continued payment is vulnerable to deterioration in the business and economic environment. Angola's ratings “reflect weak governance indicators, high inflation, high levels of foreign-currency denominated government debt and one of the highest levels of commodity dependence among Fitch-rated sovereigns”, it said. However, this is balanced by higher international reserves relative to peers, current account surpluses and “manageable debt repayment risks due to a still supportive oil price environment over the next two years”. Fitch forecasts GDP growth of 1.8 per cent this year and 2.2 per cent next year, from 0.8 per cent last year, driven by the non-oil economy. Inflation is projected to average 28 per cent this year and 18 per cent next year, from an average 15.2 per cent last year. The country’s economy is projected to have expanded by 0.9 per cent in 2023, down from 3 per cent in the previous year amid lower oil production and prices, according to a report from the International Monetary Fund in July. Its economy is forecast to grow by 2.4 per cent and 2.8 per cent in 2024 and 2025 respectively. Angola, which was part of Opec since 2007, left the group last year “in defence of its interests”, Diamantino Azevedo, Minister of Mineral Resources, Oil and Gas, said at the time. “Angola boasts a rapidly growing consumer market and is in the process of economic recovery following a period of contraction. The country is also believed to have substantial reserves of critical and rare earth minerals, including copper, cobalt, manganese, and lithium, all of which are essential for the UAE’s technological and renewable energy goals,” Mr Ribe said. Angola is also developing new railway links as it focuses to diversify its revenue base and strengthen economic partnerships globally. It is building a railway corridor that links the resource-rich Democratic Republic of Congo and Zambia to the port of Lobito in Angola. The US is funding the project to refurbish the existing 1,300km rail line and has taken the first steps to building out another 800 kilometres, the US Secretary of State Antony Blinken said during a visit to Angola in January, according to a Reuters report. “The UAE is looking at Angola strategically as a transport corridor, particularly Lobito railway line to central Southern Africa and Central Africa … and that ties in also with the diversification of UAE portfolio,” said Alex Vines, director of Africa programme at Chatham House. “It is also investing into mining assets, for example, copper … a strategic commodity for the energy transition.” The Emirates is pursuing a green agenda that includes a pledge to achieve net zero by 2050, reduce carbon emissions by 40 per cent by 2030 and invest tens of billions in clean energy. The current Angola administration’s privatisation drive “will help support increased global investor interest in the country,” according to S&P Global Market Intelligence. “Angola has significantly increased privatisation since launching its privatisation programme in 2019. By January 2023, the government had privatised 93 assets. President Lourenci furthered these efforts by signing Presidential Decree No 78/23, extending the programme through 2026 with the aim of privatising 73 additional assets.”

Angola critical minerals are key investment amid growing UAE ties

Gulf nation is Luanda's primary market for diamonds, absorbing two thirds of its exports