RE: More Press for RE2 May 2021 23:52
There's no direct Chinese control over PRE's proposed mines eg: Longonjo and Coola, but Angola's economy is pretty dire and seriously in hock to China ($21.5bn debts - over 50% of its entire external debt). It pays Chinese interest by exporting its oil to China (2nd biggest supplier after Russia). With falling oil prices, COVID and falling oilfield output from chronic under-investment, Angola has had to negotiate a 3 year suspension of debt repayment with China, and also has a debt suspension agreement with the G-20. It has to partly service the $4bn of other debt outside these arrangements by raiding its foreign currency reserves, and depleting the ASWF (Angolan Sovereign Wealth Fund). External reserves are down to $10bn (2020) from $34bn (2013) and the ASWF is down to its last $5bn.
Angola is pretty high on Goldman Sachs' shortlist of likely sovereign defaults in Africa in 2021.
Other economic indices in Angola don't make for happy reading; negative GDP growth for years, 22.3% inflation, unemployment 28% to 34%, 6th year of technical recession, currency depreciation 40% over last 7 years, public debt running at 120% of GDP, 80% of debt is denominated in foreign currency so susceptible to adverse exchange rates.
China and the G-20 want Angola to restructure its debt probably in 2021, but China tends to do such things in secret to gain maximum advantage by bilateral and opaque negotiation ahead of international action. There are plenty examples where China has traded debt for equity in infrastructure and commodities in other heavily- indebted African countries, and this is where the 'control' risk now lies with Angola too.
See this link from June 2020 where Angola is seeking to give China increased equity in its oilfields to meet its debt obligations:
https://www.theafricareport.com/29991/seeking-debt-relief-angola-opens-door-of-oilfield-holdings-to-china/
It has also been reported that China has already suggested to Angola they want long term concessions on the Benguela Railway and Lobito port infrastructure as compensation for their debt relief . So far Angola has resisted, offering equity and concessions in some of their offshore oil blocks instead.
So there it is - Angola is is completely on the back foot in terms of negotiating strength with China. China wants to secure its own debt restructuring deals ahead of any other Western negotiations. Its track record is to swap debt for equity by taking over strategic infrastructure and control of commodities in secret deals.
A worry for PRE ought to be that China will next target Angola's rare earths, to secure the substantial economic benefits of a vertically integrated RE production centre on the West's doorstep. Angola will add $4.4bn debt this year, inviting China to invest in mining, agriculture, animal husbandry and tourism. China has responded "Chinese companies have the capabilities and conditions to supply equipment and technologies to re-launch industry in Angola"
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