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Cablegate: Angola - Troops Shut Down Amcit-Owned Quarry

VZCZCXRO8196
PP RUEHJO
DE RUEHLU #0358/01 1071254
ZNR UUUUU ZZH
P 171254Z APR 07 ZDK
FM AMEMBASSY LUANDA
TO RUEHC/SECSTATE WASHDC PRIORITY 3877
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHJO/AMCONSUL JOHANNESBURG 0447

UNCLAS SECTION 01 OF 02 LUANDA 000358

SIPDIS

SENSITIVE
SIPDIS

FOR AF/S and EB/CBA
JOHANNESBURG FOR FCS

E.O. 12958: N/A
TAGS: EINV ETRD BEXP PGOV EMIN ECON AO
SUBJECT: ANGOLA - TROOPS SHUT DOWN AMCIT-OWNED QUARRY


LUANDA 00000358 001.2 OF 002


1. (SBU) Summary. On March 27, 2007, Angolan soldiers shut down
an Amcit-owned quarry near Luanda, claiming to be acting on behalf
of Angola's National Reconstruction Council. Several other quarries
were shut down at the same time. The Embassy has explained the
potentially damaging effect on investment from the U.S. with the
Deputy Prime Minister, the Ministry of Exterior Relations and the
National Association for Private Investment. The Deputy Prime
Minister has assured Ambassador Efird that he will raise the issue
with President dos Santos during a face-to-face meeting this week.
End Summary.

2. (SBU) Background: On the morning of Tuesday, March 27, soldiers
identifying themselves as troops of the National Reconstruction
Council (Gabinete de Reconstrucao Nacional) arrived at a quarry near
Luanda owned by Afritrack and instructed the workers to turn off all
equipment, prevented delivery trucks from hauling away rock and
refused entry to trucks arriving to pick up rock. Afritrack is an
American-owned Angolan construction and manufacturing company, and
its CEO has lived in Angola for 15 years. Valued at USD 6 million,
the quarry employs 300 workers. The CEO told us that workers at the
quarry are unable to perform any work, and that the lack of rock
from the quarry has also slowed work in other Afritrack businesses,
such as housing construction. According to the CEO, the soldiers
produced no documents to support their action and had not provided
any as of Monday, April 16. Afritrack CEO called on Ambassador
Efird on April 3 to initially advise her of the situation, and has
followed up with subsequent telephone conversations with Ambassador
Efird and Econ/Commercial officer.

Embassy Advocacy
----------------
3. (SBU) Following the meeting, Ambassador Efird telephoned Deputy
Prime Minister Aguinaldo Jaime on April 3 to discuss the issue and
faxed him supporting documentation on the case. Jaime called back
the following day to report that he had briefed President Jose
Eduardo dos Santos's Diplomatic Advisor. On April 16, 2007 DPM
Jaime told the Ambassador that the documents are with the President
and said that Jaime would personally brief the President at the end
of the week. In addition, Embassy Pol/Econ Chief raised the issue
with the National Association for Private Investment (ANIP) on April
10, and with the Ministry of Foreign Affairs. ANIP volunteered to
have its legal staff review Afritrack's case with Afritrack's legal
department.

4. (SBU) During their meetings with GRA officials, Ambassador Efird
and P/E Chief both emphasized the Embassy's concern that Afritrack
be given written notice explaining the situation; accorded equitable
treatment under the law, and be provided with the full protection of
Angolan law accorded to investors. We also reminded Angolan
officials that the US Embassy has a responsibility to US companies
wishing to invest in Angola and that if this situation does not
receive due process quickly we would revise our Investment Climate
Guide and other guidance to investors to reflect this situation. We
strongly reiterated that armed militia denying an owner and her
employees' access to their place of work is not an acceptable
business practice. Note: Angolan law on eminent domain requires
sufficient notice to individuals and businesses to be affected by
government taking of property and adequate compensation for any
property taken by the government. End note.

Other Companies also Shut Down
------------------------------
5. (U) Several companies operate quarries near Afritrack's,
including the Portuguese construction companies Soares da Costa,
Mota-Engil and Tecnovia, as well as Cojoal, Sanir, and Africavision.
They were also shut down. The Portuguese Ambassador told
Ambassador Efird that his Embassy had also been contacted by the
Portuguese companies affected by the shut down and asked what
measures the US Embassy was taking. On April 16, 2007 the Afritrack
CEO told us that the Tecnovia and Mota-Engil quarries had been
permitted to re-open on Saturday, April 14. This was also reported
in the press. The rock quarried at these sites is used in the many
infrastructure construction projects around Luanda. Mota-Engil is
the largest Portuguese construction company operating in Angola.

6. (U) President dos Santos issued a decree on March 27 revoking all
mining permits in the area where the future Luanda international
airport is to be built. While these quarries are also located in
Vianna, it is not clear that they sit on the site of the new
airport. Afritrack's CEO asserts that her quarry is not within the
new airport zone.

7. (SBU) Comment. Embassy Luanda will continue to support the
Amcit-owned company in pursuing an acceptable solution to this
situation. That other companies have been able to reopen is a
positive sign. However, as the largest Portuguese construction firm
operating in Angola, clearly Mota-Engil has a higher degree of

LUANDA 00000358 002.2 OF 002


leverage with the government to get a quicker resolution to the
situation than a smaller company will have.
EFIRD

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