March 03, 2016 — Now, a local business is doing something smart with all that metal.
Over nearly 30 years, Angola’s brutal civil war resulted in the loss of around half a million civilian lives. Although it ended in 2002, the tanks, scrap metal, and guns strewn across the country serve as reminders of the strife.
Now, a local business is doing something smart with all that metal. Luanda-based K2L Capital launched the ADA steel mill—the largest in the country—at a cost of 261.03€ million in December. According to a CNN report, the mill, based in Barra de Dande, in the north of the country, will use scrap metal and guns left behind from the brutal civil war as its primary source of raw material.
The ADA steel mill is a significant investment for the oil-reliant country. Given the recent fall in oil prices, Angola, like other petro-states, is urgently trying diversify its economy away from energy.
“ADA is part of the road to economic diversification as it will bring a new dynamic industry to Angola,” said Georges Choucair, head of of K2L Capital. Choucair reckons that the mill can save the country174.02€ to 261.03€ million in foreign currency reserves by helping the country import less steel. He is aiming for an eventual production capacity of half a million tons of steel per year—more than enough to satisfy the national demand, leaving some over for export.
Although any diversification of the economy is welcome—as is doing some positive with the relics of Angola’s brutal civil war—steel is perhaps not the best route to resolve Angola’s many economic problems. For one thing, there is a major global glut of steel, pushing down prices and punishing exporters—basically, a similar problem to the oil industry. “Increasing infrastructure and improving human capital might be a better way to diversify,” Rachel Ziemba, managing director of emerging markets at Roubini Global Advisors, told CNBC.
Last November, the IMF recommended (pdf) that Angola focus on “expenditure rationalization” and “prudent spending,” amid feeling that ordinary citizens have not benefited from the country’s oil earnings while the elite live luxuriously. Angola’s government, run by president José Eduardo dos Santos since 1979, has been dogged by allegations of corruption. Isabel dos Santos, daughter of the president, is Africa’s wealthiest woman, generating scrutiny (paywall) over the origins of her fortune.