What is happening in Angola?

In August, the first shipment of copper left the port of Lobito in Angola and headed for Baltimore in the US. The copper originates from the southern regions of the DRC and was transported by the recently completed Lobito Atlantic Railway, which connects southern DRC, known in combination with northern Zambia as the copper belt. The railway was built by a joint venture between Trafigura, Mota-Engil, and Vecturis, heavily financed by the Partnership for Global Infrastructure and Investment (PGII), with the US as one of the main financiers.

While the US International Development Finance Corporation loaned around 250 million USD (190 million GBP) to the construction of the railway, adjacent investments into Angola’s infrastructure and energy to support the railway total around 1.3 billion USD (986 million GBP). Angola and the US have historically been not closely aligned, with Angola having strong economic and military ties with Russia and China. Historic antagonism towards the US stems from it supporting the opposition during the Angolan Civil War (1975-2002), which the current Angolan government won. The partnership signals a renewed partnership between the two.

Yet the partnership also signals a change in US investment strategy in Africa, which has focused more heavily on governance initiatives, as well as the health and agriculture sector. The recent partnership with Angola demonstrates the US’ willingness to engage through more economic means, especially within the critical minerals sector. Minerals such as copper and cobalt are plentiful in neighbouring countries of Zambia and the DRC, which have various critical applications in technologies, especially in renewable power and semiconductors.

The copper belt which includes Zambia and the DRC has an estimated 100 million metric tonnes (MMT) of copper reserves. While the likes of Chile (190 MMT), Peru (120 MMT), and Australia (100 MMT) have far larger reserves, the copper belt still represents a significant market for mineral extraction.

Chinese investment in the region, especially in copper extraction has been blooming. Both in 2023 and this year, various Chinese mining companies have invested in Zambia’s mining sector by acquiring high-output mines and stakes in mining companies. Moreover, China has recently backed the renewal of the Tazara railway, a historic Chinese-built railway completed in 1975 used for transporting copper to the Dar es Salaam port in Tanzania.

What is in it for you?

For readers in Angola, the renewed investment into the country as a transit corridor for valuable minerals is going to have a variety of positive spill-over effects for Angola’s economy. The US investment for the railway included adjacent infrastructure such as a giga solar power plant and expansion of the radio systems. Angola’s economy has historically relied on oil as its primary output, accounting for around 90% of its exports. However, Angola’s oil economy has faced international pressures, with them leaving OPEC in 2023.

The US investment in the railway and the adjacent projects will likely assist in diversifying Angola’s economy and address the large infrastructure gap that persists throughout sub-Saharan Africa.

For our readers in the DRC and Zambia, the Lobito Atlantic Railway coupled with the higher demand for copper could lead to higher investment in and growth for each respective economy. Copper already accounts for 17% of Zambia’s economy, while in the DRC, the mineral is its highest export earner with 30%. While the extractive industry can lead to growth it can also contribute to many social and environmental issues.

Copper production in southern Africa has led to increased deforestation as well as water and air pollution. Industrial-sized mines have also led to the removal of residents when a new deposit is found. Smaller-scale mines have also been connected to conflict funding and human rights abuses. With the persistent conflict in the DRC, conflict mines have historically affected mines for tin, tungsten, tantalum, and gold, however, has since been connected to mines of copper and cobalt as well. Mines in the south of the DRC have been so far less affected yet with no sign of the conflict subsiding it is unclear whether this will last. ‘Minerals such as copper have become essential raw materials in a variety of applications, including renewable technology such as wind turbines, solar power, and electronic vehicles.

This essential application has resulted in global competition for access to resources, especially by China and the West. Historically, much of the mineral extraction in Africa was dominated by European and American multinational corporations, such as Anglo-American and Glencore, with heavy backing from their respective governments. Yet Chinese corporations with added investment from State development banks have begun to acquire high stakes in the African mining sector, such as the Zambian Copper firm Lubambe.

What happens next?

Angola's priority in its pursuit to diversify its economy has come with cooperative projects with both Chinese development banks as well as US-backed initiatives. Their president, João Lourenço, in power since 2017, had abandoned his predecessors’ strict strategy of aligning only with Russia and China and has resumed friendly relations with the US and the EU. So far this strategy has proven successful, granting large investments from both sides.

While the current railway only connects to southern DRC, an expansion to the north of Zambia is already planned, with heavy backing from US mining firms. It is unclear when this extension will be ready to deliver copper to the US, considering that much of the Zambian copper supply is dominated by Chinese companies. Regardless, with the heavy demand for copper’s technological applications, the competition for resource access is likely going to grow.

The Polis Team in Berlin