Imara African Cement Report Africa, the last cement frontier Angola ...

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Euro Millions China United States EU27 India South Africa Canada Peru Brazil Hong Kong South Korea Euro Millions EU27 China United States Brazil South Africa India Singapore South Korea Japan Argentina Angola’s Diplomatic relations: A balancing act ‘Par excellence’ In the area of diplomatic relations, Angola‟s balancing act is a true work of art. The country has managed to strike a delicate balance on all sides of the political spectrum, forging a complicated web of relations with erstwhile foes, all the while being a charming courtier, and more often than not, reaping a handsome reward. Testimony to the country‟s elevated status has seen it receiving international recognition in several international forums. Angola was accepted into the OPEC cartel in 2006 (and was 2009 president) and participated in the 2009 G8 summit. Following Jacob Zuma‟s assumption of presidency, Angola‟s regional clout and importance, both economically and in matters political, is on the rise too. In 2011 Angola assumed the presidency of the 15 member regional economic group SADC, that represents about a quarter of the continent‟s population, at some 258 million people with a combined GDP of US$471bn. Angola has been particularly active in the intermediation efforts in the Zimbabwe and Madagascar political crises. Further afield and of equally significant importance has been the intermediary role in Cote d‟Ivoire‟s political stalemate and the Angolan government was particularly vocal regarding NATO‟s military deposition of Muamar Gadaffi‟s dictatorial regime, a plight that fell on deaf ears, so it turns out. Undoubtedly, as the country‟s oil fuelled providence increases, so too does its‟ eminence in all matters political and economic. Having significant scope to increase the „economic pie‟, we believe the country to still be on an ascendant tangent, in matters economic as well as diplomatic. In humble acknowledgement, even South Africa whose growth options have been all but exhausted, are looking towards the Lusophone country, hoping to benefit from the certain boom times ahead. Below we take a look at Angola‟s international relations in order of decreasing economic significance. Geopolitical review China: The dragon digs in its claws Having embarked on the most aggressive growth agenda known to mankind, China‟s dedication, discipline and progress have been nothing short of miraculous. The global recession presented an excellent buy opportunity, and China‟s burgeoning reserves were used to snap up cheap assets the world over. Having re-engaged the growth gear, the domestic economy is pumping ahead, and their positive trade balance has pushed foreign crude currency and gold reserves to over US$ 3tn, while the western world grapples with austerity measures, sticky unemployment levels and an overriding sense of doom and gloom. Angola‟s strong relationship with China has proved to be mutually beneficial and the „Angola Mode‟ as was dubbed by the World Bank has led to growth for both China and Angola. Under this model long term oil backed infrastructure loans have propelled Angola‟s infrastructural development to an extent that would not have been possible using traditional means of financing. Since 2004, it is estimated that in the region of some US$ 11bn in long term loans at concessional rates has been advanced to the Angolan government and in return Angola has pledged 220 000 bpd (about 12% of daily production and 5% of China‟s international crude imports in 2009) to service the debt commitment. Also as part of the financing agreement, it was agreed that Chinese companies would be used in the infrastructure projects, however there is an Angolan staffing requirement of 30% in order to ensure at least some employment creation in the process. In total over 150 projects across the length and breadth of the country have been awarded to Chinese firms in the provision of roads, bridges, dams, housing, schools, hospitals, the list goes on. Over the past eight years there has been a 35-fold increase in the value of Sino-Angolan trade, with especially strong growth since 2004 following the award of US$4.5bn in Chinese oil backed loans and credit lines to finance infrastructural development. In 2009, according to Chinese officials, 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Figure 7: Angola's top 10 Export partners FY2009 Historically, Brazil has enjoyed a trade surplus of over US$1bn, linked to lines of credit and strong cultural/lusofone ties. 6,000 5,000 4,000 3,000 2,000 1,000 - Figure 8: Angola's top 10 Import partners FY2009 Improved bilateral relations should see SA/Angola trade increasing significantly in the coming years. Source: WTO Source: WTO 11
US$ Millions US$ per barrel over 100 Chinese firms were operating in Angola (over 50 of them of significant size) and many of these companies use Chinese workers. Officially some 40,000 Chinese work on official infrastructure projects. According to a statement by the Ministry of Finance in January 2009, the second phase of disbursements under the existing second US$ 2.5bn credit line of China‟s Exim Bank started, with a total of US$1.6bn in funds available for projects in infrastructure, transport and agriculture. During the 1990s, bilateral trade ranged between US$ 150m and US$ 700m per year. In 2000, it exceeded US$ 1.8bn, and by the end of 2005 it had increased fourfold to US$6.9bn. Within a year it had nearly doubled to US$ 12bn, making Angola China‟s largest trading partner in Africa (with South Africa now second). China expanded at its fastest ever rate in 2008, with total bilateral trade reaching an estimated US$25.3bn. This represented a 79% increase on the level of total trade in 2007 and was primarily driven by high oil prices. In 2008 Angola was the second largest source of crude oil to China (after Saudi Arabia), providing 28.89m MT (594,533 bpd) – although in 2009 there was a decline in the imports of Angolan oil to China associated with the global crash. According to the World Trade Organisation, in FY2009 China accounted for 38% of all Angola‟s exports (mostly oil), a sum of US$9.4bn. Total trade with China amounted to US$ 11.3bn and accounted for 30% of the country‟s total trade in FY2009. In his outgoing speech as Chinese ambassador to Angola in June 2011, Ambassador Zhang Bolun, quoted the trade between China and Angola for FY2010 at US$ 24.8bn, more than double the preceding year, and in line with expectations, following the recovery of the oil price. There is no doubt that this relationship will continue to be of primary importance. China‟s principal economic relations with Angola have been forged between state enterprises Sinopec, Unipec, China International Fund (CIF) and Angola‟s MNC, Sonangol. China has been much more aggressive in their conquest for African raw materials, and this is particularly evident in Angola, where they are miles ahead of any of their contemporaries in the BRICS grouping. 40,000 35,000 30,000 25,000 20,000 Figure 9: Total Sino-Angolan trade 120 100 80 60 Iraq, 225 , 6% Sudan, 253 , 7% Figure 10: China Crude imports breakdown 2010 Kuwait, 197 , 5% Brazil, 162 , 4% Kazakhstan, 202 , 5% Saudi Arabia, 896 , 24% 15,000 10,000 5,000 - 2003 2004 2005 2006 2007 2008 2009 2010 2011F 40 20 - Russia, 306 , 8% Oman, 319 , 9% Iran, 428 , 11% Angola, 791 , 21% Country, 000's bpd, % Total trade (LHS) Ave Oil price (RHS) EU 27 and Portugal Trade links with Europe dominated by Portugal The European Union (EU), made up of 27 member states is Angola‟s second most important economic partner and Portugal remains the dominant European country with which trade is conducted. In fact Angola ran a trade deficit with EU27 of €1.2bn with Portugal supplying the bulk of imports. With continued economic contraction at home, Portuguese investment into Angola has continued to accelerate. Renowned for their superior workmanship, although more expensive than their Chinese counterparts, Portuguese contractors continue to win new tenders. Somague, Texeira Duarte, Mota-Engil (EGL:PL), Edifer, Soares da Costa (SCOAE:PL) et al, have bill boards all over Luanda for new construction projects. Their influence extends to the banking sector, where Banco Espirito Santo de Angola (through BES: PL), Banco BIC, Banco de Fomento de Angola among others all have Portuguese shareholdings. In telecoms Portugal Telecom (PTC: PL) owns a 25% stake in Unitel and the hotels sector has several hotels jointly owned with Portuguese firms. Alvalade Hotel, Tropico Hotel and the brand new five star, Epic Sana Luanda are all hotels with Portuguese partners. A low level of tertiary and specialist skills has also seen the continued dependence on Portuguese expatriates who are also amply encouraged by Portugal‟s economic woes. The absence of a well-developed agricultural industry continues to necessitate a significant import requirement, which contributes to Angola‟s excessively high prices. The food import bill from EU27 amounts to some €480m (10% of total EU exports) with everything from olives to bottled water being imported. The Portuguese cultural roots run deep and due to decades of net immigration during the civil war there are a large number of Angolan descendants living permanently in Portugal. 12
Page 1 and 2: Angola Imara African Country Cement
Page 3 and 4: Angola Country Map 11a 1 9a a 8 5 2
Page 5 and 6: Executive Summary Comeback post 201
Page 7 and 8: Table 1: Timeline for major policy
Page 9 and 10: Table 3: 2011 Budget and Q1 income/
Page 11: Constraints to the growth story Ang
Page 15 and 16: Chevron also holds a 38.1% interest
Page 17 and 18: Italy Although Italy‟s oil intere
Page 19 and 20: SONANGOL: Angola’s de facto Sover
Page 21 and 22: Oil Majors in Angola´s Petroleum S
Page 23 and 24: In January 2011, Eni was awarded ri
Page 25 and 26: BAI BFA BESA BPC Banco BIC BESA Ban
Page 27 and 28: Table 9: Regional Banking Comparati
Page 29 and 30: Arguments for and against the devel
Page 31 and 32: Orascom Mobinil TNM Safaricom Econe
Page 33 and 34: Telephonic listings of Angola (ELTA
Page 35 and 36: Millions of Hectolitres NB Delta Cu
Page 37 and 38: Hotels, Tourism and Construction Ov
Page 39 and 40: • Kinaxixi Shopping Center and Of
Page 41: Capital Securities Botswana Ground

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