Angola's National Hydrocarbons Company (Sonangol), which has traditionally focused on oil, has announced an investment of more than $25 million in mining exploration, marking a significant step in its diversification strategy. This initiative aims to exploit Angola's mining potential, particularly in the iron, diamond and phosphate sectors, to reduce the country's dependence on oil revenues.
Known as the engine of the Angolan economy, Sonangol is looking to expand its activities beyond hydrocarbons, a sector that has suffered from volatility in recent years. In 2020, the company recorded a colossal loss of 4.1 billion dollars, weighed down by the drop in global demand for oil and a crushing debt of 26.8 billion dollars. Faced with these challenges, diversification into mining resources appears to be the answer to stabilising its revenues and supporting the country's ambitions for economic development.
The $25 million investment will be allocated to exploration campaigns in several mineral-rich regions of Angola. Angola, which has unexploited deposits of iron, diamonds and phosphates, could thus position itself as an emerging player in the African mining sector, following in the footsteps of countries such as the DRC and Zambia.
This announcement comes at a time when Sonangol is continuing its restructuring efforts. Since 2021, the company has sold 39 assets for $60 million as part of its privatisation programme, while refocusing on strategic projects. In addition, Sonangol has already invested in industrial initiatives, such as the $1.9 billion Soyo fertiliser plant, which is due to come on stream in 2026 and produce 500,000 tonnes of fertiliser a year.
However, this diversification is not without risks. The Angolan mining sector suffers from a lack of infrastructure and a still-perfect regulatory framework, obstacles that could put the brakes on Sonangol's ambitions. In addition, the company has to juggle persistent debt and the uncertainties associated with fluctuations in world markets, as demonstrated by the oil crisis of 2020.
By embarking on mining exploration, Sonangol hopes not only to diversify its revenues, but also to stimulate the local economy. Exploiting new deposits could create jobs and attract foreign investors, at a time when Angola is seeking to reduce its dependence on China, the country's main creditor. The project is also part of a wider drive to exploit natural resources to lift part of the population out of poverty, a key objective of the Angolan government.
While the $25 million is a first step, further investment will be required to turn Angola into a major mining player. The success of this diversification will depend on Sonangol's ability to overcome its financial challenges and establish solid partnerships with international investors. In the meantime, this initiative marks a turning point for the company, which could ultimately redefine its role in the Angolan and African economy.