MINING (40)
Last week at the China Mining Forum, François Balumuene, the Democratic Republic of Congo's (DRC) ambassador to China, invited investors to contribute to the local production and processing of resources, not just extraction.
"We have highlighted all our country's mining potential to encourage investors to come not just to extract, but above all to produce, transform, and go as far as possible toward the finished product. This message aims to raise awareness because we are no longer a simple mining community," Balumuene said, stressing the need to create more value for the Congolese people.
The diplomat’s words echo Julien Paluku’s, the Congolese Minister of Foreign Trade. On October 17, speaking at the 10th Rebranding Africa Forum in Brussels, Belgium, Paluku referenced a 2021 BloombergNEF report showing that investing in processing minerals like cobalt and copper in the DRC is more cost-effective.
According to the report, "building a 10,000-ton cathode precursor plant in the DRC would require an investment of $39 million. This is three times less than the cost of a similar plant in the USA. The same plant in China and Poland would cost $112 million and $65 million, respectively."
The DRC is also looking to attract investors for lithium battery production. During a recent visit to Hungary, President Félix Tshisekedi was accompanied by the Managing Director of Congo Battery, highlighting the government's interest in this sector. Hungary, one of Europe’s largest battery producers, could help establish this industry in the DRC.
The recent declarations align with the government’s ambition to leverage the DRC’s position as a leading producer of strategic minerals essential for energy transition. Ultimately, the goal is to build a strong local industry that can compete with major processing countries like China.
In his recent speech, Balumuene clearly relayed this ambition of the DRC to process its mineral resources locally, to ensure that the Congolese people benefit directly.
Georges Auréole Bamba
Gécamines has offered to buy the assets of Chemaf Resources in the Democratic Republic of Congo (DRC). Chemaf has been running since 208 the Mutoshi project. The latter can produce 16,000 tonnes of cobalt and 50,000 tonnes of copper annually. Due to financial issues, however, Chemaf announced in June 2024 that it planned to sell itself and its subsidiaries, including Mutoshi, to the Chinese company Norin Mining. Gécamines, the State company for Mines, opposed this sale and quickly voiced its objections, which the government supported.
The mining license for Mutoshi belongs to Gécamines. In 2015, Gécamines gave Chemaf a 25-year lease for the project. Gécamines has a "discretionary right of prior approval" for any changes in control, which Chemaf is said to have ignored before trying to finalize the sale. After canceling the deal with Norin Mining, Gécamines is now looking to regain control of Mutoshi and other licenses held by Chemaf.
For now, details of Gécamines’s offer are unknown, and it’s unclear what will happen next. This bid comes as the DRC seeks to diversify its partnerships in strategic minerals, which are mostly controlled by Chinese companies. For example, China's CMOC operates two mines in the DRC and is set to become the world’s leading cobalt producer by 2023. Ivanhoe Mines, which co-owns the largest copper mine in the DRC, is also over 34% controlled by Chinese firms, China CITIC Bank and Zijin Mining Group. The latter, it should be noted, co-owns the Kamoa-Kakula project with Ivanhoe and the Congolese State. The State owns 20% of the project, while the other own 39.6% each.
In an October 2024 interview, Congolese Mining Minister Kizito Pakabomba said the DRC is looking for new investors, including from the United Arab Emirates. He stressed the need to "attract better investors, more investors, and diversified investors," as most of the country’s copper and cobalt mines are currently controlled or linked to Chinese companies.
Becoming a key player in production and distribution
Gécamines has started renegotiating agreements with Chinese companies. After blocking CMOC exports for nearly a year, last year the Congolese company secured the right to acquire a production volume proportional to its 20% stake in the Tenke-Fungurume mine. At the beginning of 2024, Gécamines obtained similar production rights from Sicomines, a joint venture with Chinese companies where it holds a 32% stake. Gécamines is also negotiating similar agreements with other joint ventures it is involved in. Once a major player in copper and cobalt production in the 1980s, Gécamines aims to become a key trader in Congolese copper and cobalt.
Last month, Bloomberg reported that Gécamines made its first copper sales thanks to an agreement with CMOC. The Congolese company sold undisclosed quantities of copper to Glencore, Mercuria Energy Group, and Trafigura Group.
Tenke Fungurume has an annual production capacity of 450,000 tonnes of copper and 37,000 tonnes of cobalt. If the plant operates at full capacity this year, Gécamines could directly market 90,000 tonnes of copper and 7,400 tonnes of cobalt.
Umicore and STL (Societé pour le Traitement du Terril de Lubumbashi) , subsidiary of Gécamines, have signed an exclusive, long-term partnership agreement whereby Umicore will support STL to valorize germanium from the Big Hill tailings site in Lubumbashi: https://t.co/RFWqpPd8NZ pic.twitter.com/avWPJtEtaa
— Umicore (@UmicoreGroup) May 8, 2024
Besides copper and cobalt, Gécamines is working to strengthen its position in other metals, including Germanium. In 2023, Gécamines’ subsidiary STL built and launched a hydrometallurgical plant to process Germanium tailings from the "Big Hill" site in Lubumbashi. This project aims to secure 30% of the world’s germanium supply, currently dominated by China. Germanium is an essential metal used to make semiconductors.
On this project, Gécamines teamed up with Umicore, a Belgian company. Under their partnership agreement announced in May 2024, Umicore will provide technical expertise to refine germanium concentrates locally. In mid-October 2024, Gécamines announced its first shipment of germanium to Umicore.
"This first shipment of germanium confirms our ambition to make Congo a global hub for strategic metals, both for their extraction, which we already are in part, and for their local transformation in the future," said Gécamines President Guy Robert Lukama.
#News - Ivanhoe Mines and Gécamines sign a new joint venture agreement to restart the ultra-high-grade Kipushi Mine, a century since first opening.
— Ivanhoe Mines (@IvanhoeMines_) January 16, 2024
👉https://t.co/H27OQnVlUP pic.twitter.com/AWFzdZ14jN
Gécamines also aims to become a major zinc supplier, at the global level. This year, in partnership with Ivanhoe Mines, it reopened the Kipushi mine, inactive since 1993. Gécamines wants Kipushi one of the world’s 10 largest zinc mines. At full capacity, Kipushi is expected to produce 278,000 tonnes of zinc annually, averaging 240,000 tonnes per year over 14 years.
Under an agreement signed last January, Gécamines' stake in the Kipushi project will increase from 38% to 43% on January 25, 2027. It will rise to 80% once at least 2 million tonnes of ore have been extracted and processed, compared to Ivanhoe's current 20% stake as majority shareholder.
Avoid past mistakes
The measures taken by the Democratic Republic of Congo (DRC) in recent years to control its mineral wealth could boost mining’s economic impacts. In addition to previous successes, Kinshasa has revised the "mines for infrastructure" contract with China (Socomines), securing over $7 billion in infrastructure investments and a 1.2% royalty on Socomines' annual revenue. Under the agreement with CMOC, Gécamines will receive $800 million between 2023 and 2028, plus at least $1.2 billion in dividends over the life of the Tenke Fungurume mine.
The government’s efforts come as the country’s mining industry, especially the copper, cobalt, and lithium sectors, appeal more to investors. These minerals are vital for the energy transition. However, the government and Gécamines must avoid past mistakes, such as poor management, unfavorable agreements, corruption, and legal disputes with foreign investors that have diminished Gécamines' influence over the years.
Emiliano Tossou, Ecofin Agency
Ivanhoe Mines has cut its zinc production targets for 2024 at the Kipushi mine in the Democratic Republic of Congo (DRC). In a press release on October 7, 2024, the Canadian company said it halved the estimate from 100,000-140,000 tonnes to 50,000-70,000 tonnes of zinc concentrates.
"The transition to a stable annual production rate of over 250,000 tonnes of zinc concentrate from the Kipushi concentrator has been slower than expected due to three main factors: first, the ore extracted has a high iron content, which negatively affected concentrator recoveries. Second, the density separation circuit had more fine material than anticipated, limiting throughput. Lastly, the increase in power needs from 5 MW during construction to 18 MW for operations revealed issues in the local power grid," the company explained.
Ivanhoe said it is working on a program to fix these issues but did not provide details on when it will be completed.
Despite these challenges, Kipushi produced 17,817 tonnes of zinc in the third quarter of 2024, and exports began toward the end of that quarter. However, reaching the expected annual production of over 250,000 tonnes of zinc concentrate from this mine is still a long way off.
Kipushi is owned by Ivanhoe Mines (62%) and the Congolese government (38%).
ET
Ivanhoe Mines scaled down its 2024 production targets at the Kamoa-Kakula mine in the Democratic Republic of Congo (DRC). In a press release dated October 7, the Canadian company revised its expectations from 440,000-490,000 to 425,000-450,000 tonnes of copper concentrate.
Last month, Ivanhoe was very optimistic about the mine’s outputs: "Thanks to ongoing improvements in throughput and optimized copper recovery after launching the Stage 3 concentrator fine mills, Kamoa-Kakula expects to maintain its record production run and achieve its 2024 targets".
With the commissioning of the third treatment plant last August, Kamoa-Kakula achieved a record production of 116,313 tonnes of copper concentrate in Q3 2024. So far this year, the mine has produced 303,328 tonnes, according to Ivanhoe.
While the revised estimate integrates the commissioning of the Phase 3 concentrator, it reflects "production losses due to intermittent electricity supply from the grid, especially before installing additional on-site generation capacity and ongoing agreements for electricity imports." It also includes "known and unknown risks and uncertainties that may cause actual results to differ significantly." The country’s power issues caused production in H1 2024 to fall 5% year-on-year to 187,015 tonnes.
Last year, Kamoa-Kakula produced 393,551 tonnes of copper concentrate, up 18% year-on-year. Sales in 2023 also went up, exceeding $2.7 billion. This year, they should be higher due to rising copper prices. In Q1 2024, the average copper price reached $9,215.84 per tonne compared to $8,726.90 during the same period in 2023.
Kamoa-Kakula is owned by Ivanhoe Mines (39.6%), China’s Zijin Mining Group (39.6%), Crystal River Global Limited (0.8%), and the Congolese state through Gécamines (20%). During a Council of Ministers meeting on October 4, 2024, Minister Jean-Lucien Bussa expressed a desire for closer involvement of the Congolese State in selecting buyers for the copper produced by this mine, which is not only the largest in the DRC but also ranks as the third largest copper mine in the world.
Pierre Mukoko
The Democratic Republic of Congo (DRC) is set to gain significantly from the discovery of large gold reserves by Barrick Gold Corporation, a Canadian firm. Mark Bristow, the firm's President and CEO, announced that these reserves are located in the Kibali region, about 150 kilometers from Arua near the Ugandan border.
This discovery presents major opportunities for mining subcontractors, local councils, and the government to earn more through taxes and infrastructure contracts with Barrick as it aims to increase gold production in the DRC.
To date, Barrick Gold claims payments of $2.87 billion to local contractors and suppliers, $1.66 billion in royalties, taxes, and levies, and $216 million in infrastructure and community support.
While specific details about the reserves are still under wraps, exploiting them could position the DRC among the world's top gold producers and exporters. Bristow stated that the new reserves will greatly enhance output at Kibali, which is already the largest gold mine in the world. “The newly defined ARK target, located 4 kilometers from the processing plant, has the potential to provide a multi-million ounce high-grade deposit,” he said.
In 2023, the DRC was the seventeenth-largest gold producer globally, with a slight increase in output from 2022. Production is expected to rise by 0.88% between 2023 and 2027, according to Global Data.
Barrick Gold, which owns the Kibali mine, is a joint venture between Randgold (45%), AngloGold Ashanti (45%), and Sokimo (10%).
Emmanuel Tumanjong
Cobalt prices hit their lowest level since January 2016 last week, according to Fastmarkets. On September 19, 2024, cobalt was trading between $22,046.2 and $26,014.5 per tonne, continuing a downward trend started over two years. This decline is primarily due to an oversupply from the Democratic Republic of Congo (DRC), the world's leading cobalt producer.
The Cobalt Institute reported that global cobalt supply reached 210,000 tonnes in 2023 and is expected to rise to 245,000 tonnes this year. Congolese production is projected at around 140,000 tonnes in 2023, a 21% increase from the previous year, largely driven by the Chinese company CMOC, which operates the Kisanfu and Tenke Fungurume mines and reported a 178% increase in cobalt production in the first half of 2024.
Global demand for cobalt was 197,000 tonnes last year and is expected to grow to 237,000 tonnes in 2024. No price increases are anticipated in the short term due to demand not exceeding supply. Earlier this year, the DRC considered implementing export quotas to help stabilize prices, as falling cobalt prices directly impact its economy.
In a July 2024 report, the IMF warned that declining cobalt prices "are likely to weigh further on the country's external position" in 2024. This could lower the DRC’s export revenues, reduce foreign currency reserves, and complicate import financing. Current prices, however, remain above the IMF's projected $21,305.4 per tonne for 2024.
Despite the price drop, the long-term outlook for cobalt is positive due to the global energy transition and expected growth in electric vehicle production. The International Energy Agency predicts that global demand for cobalt will double by 2030, reaching 410,000 tonnes.
Emiliano Tossou, Ecofin Agency
Eurasian Resources Group (ERG), a Luxembourg-based mining company, has secured a $150 million pre-export financing agreement with the Bank of China London Branch and Glencore International. The funds will finance ERG's operations in the Democratic Republic of Congo (DRC), including Metalkol’s which focus on reprocessing copper and cobalt tailings.
A pre-export financing agreement allows a company to borrow money using its future export revenues as collateral, providing liquidity before product sales. The $150 million financing is backed by a contract to supply copper cathodes from ERG's Metalkol operation in the DRC. According to the company, the funds will help sustain the Group's ongoing investments at Metalkol and in the wider Kolwezi region.
"We are delighted that Glencore and the Bank of China have collaborated with us to set up this pre-export financing facility for Metalkol, which will enable us to prioritize the company's investment program," said Nicolas Treand, CEO of ERG Africa.
The DRC’s mineral reserves, especially cobalt and copper, make the country strategic for ERG. The firm, 40% owned by the Kazakh state, has four mines in the DRC: Frontier, Comide, Metalkol, and Boss Mining, as well as other projects at various stages of development.
Earlier this year, the Congolese government suspended nine of ERG's subcontractors working in its copper and cobalt mines. According to Bloomberg, they were suspended for "non-compliance with local content rules." Before that, the Ministry of Mines had suspended operations at Boss Mining, an ERG-owned copper and cobalt operation, citing environmental pollution. In February 2024, Congolese company Gécamines expressed interest in buying back these assets to strengthen its role in the global metals market, but no developments have been announced since.
Louis-Nino Kansoun
Eurasian Resources Group (ERG), a mining company based in Luxembourg, has signed a pre-export financing agreement with the Bank of China London Branch and Glencore International. ERG secured a $150 million loan to support its operations in the DRC, including the Metalkol unit, which focuses on reprocessing copper and cobalt tailings.
A pre-export financing agreement allows a company to borrow money using its future export revenues as collateral, providing liquidity before product sales. The $150 million loan is backed by a contract to supply copper cathodes from the Metalkol operation. The funds will help "maintain the Group's ongoing investments at Metalkol and in the wider Kolwezi region," according to the company.
"We are delighted that Glencore and the Bank of China have collaborated with us to set up this pre-export financing facility for Metalkol, which will enable us to prioritize the company's investment program," said Nicolas Treand, CEO of ERG Africa.
The DRC is strategically important for ERG due to its mineral resources, especially cobalt and copper, which have seen rising prices recently. The company, which is 40% owned by the Kazakh state, operates four mines in the DRC: Frontier, Comide, Metalkol, and Boss Mining, along with other projects at various stages of development.
Earlier this year, the Congolese government suspended nine subcontractors working in ERG's copper and cobalt mines for "non-compliance with local content rules." Additionally, the Ministry of Mines previously suspended operations at Boss Mining due to environmental pollution accusations. In February 2024, the Congolese company Gécamines expressed interest in buying back these assets to strengthen its role in the global metals market, but no updates have been announced since.
Louis-Nino Kansoun
The Kamoa-Kakula copper complex in the DRC produced 40,347 tonnes of concentrate in August 2024, a record. Kamoa-Kakula is operated by Ivanhoe Mines, a Canadian company.
The record performance is partly due to the commissioning of a third concentrator. However, the previously running plants also recorded strong results. “On August 31, the combined output from the Phase 1, 2, and 3 concentrators reached a daily record of 2,096 tonnes of copper. This included 1,760 tonnes from the Phase 1 and 2 concentrators, which also set a record for the company,” Ivanhoe Mines wrote in a statement dated September 4.
Ivanhoe added that Kamoa-Kakula produced around 263,000 tonnes of copper, including 14,000 tonnes from the new third plant, since the beginning of 2024. This is against 393,551 tonnes of copper concentrate throughout the past year, thus 18% up.
The Canadian firm expects Kamoa-Kakula to produce between 440,000 and 490,000 tonnes of copper concentrate this year.
Once the project’s third plant is fully operational, Ivanhoe and its partners expect this output to reach 600,000 tonnes per year, making Kamoa-Kakula the third-largest copper mine in the world.
LNK
The Development Bank of Southern Africa (DBSA) has approved a $200 million loan for the Lobito corridor modernization project. In a statement dated September 3, the lender said “The funding will support the construction and upgrading of the railway infrastructure, including the procurement of 50% of the required wagons from a South African local manufacturing company.” The financing is alongside a $553 million commitment from the US International Development Finance Corporation.
This project, backed by the United States and the European Union, aims to upgrade the 1,289 km main railway line connecting Lobito, Negrao, and the Luau border, along with a 28 km branch line to Bimbas. It will also develop port facilities to transport copper and cobalt ores from the landlocked Democratic Republic of Congo and Zambia through Angola.
Various observers claim that the US and EU are interested in securing supplies of critical minerals amid the current energy transition, as these resources are seen as essential. "The Lobito Corridor is set to become the most competitive route for exporting these minerals, saving exporters significant time and money. It will not only improve the economic prospects of Angola and the DRC but also promote greater connectivity and trade within the Southern African Development Community (SADC)," the DBSA stated.
On August 22, 2024, trading company Trafigura announced the first shipment of Congolese copper to the US port of Baltimore via the Lobito Corridor. The train carrying this shipment took six days to travel from Kolwezi to Lobito, demonstrating the efficiency of this new route for minerals from the Congolese Copperbelt.
China, which operates mines in the DRC and Zambia, is also interested in establishing logistical support infrastructure for Tanzanian ports. The country is the main backer of the Tazara railway modernization project, which is proposed as an alternative to the Lobito Corridor.
Henoc Dossa, Ecofin Agency
More...
Copper and cobalt producer Kamoa Copper SA signed 13 outsourcing contracts with Congolese small and medium-sized businesses two weeks ago. The deals were sealed on August 22. They are worth around $35,000 respectively, based on data from the DRC’s Outsourcing Agency, the ARSP. 2024.
"Kamoa Copper supports entrepreneurship by publishing its tenders on the PSRA website and creating or facilitating partnerships between local and international contractors," said Riaan Vermeulen, the company's managing director.
These contracts mainly involve supplying technical services. "The duration of the contracts has been increased from 12 months to 36 months to help these companies gain credibility with financial institutions, which is essential for their growth and job creation," the company stated on its X account.
Regarding the contracts’ value, the DRC’s law on outsourcing stipulates that for any contract of more than $35,000 a call for expressions of interest is compulsory. The same law allows companies with 51% local ownership to bid for the contract.
The outsourcing market in the DRC raked in about $8.5 billion in 2022, according to the World Bank. This represented 13.5% of the country’s GDP that year.
In 2023, Kamoa Copper SA's operating expenses surpassed $1 billion, covering various purchases, transport, and external services. The company did not specify how much of this spending was related to compliance with the Subcontracting Act. Between 2022 and 2023, Kamoa Copper announced around $2 billion in similar expenditures.
Georges Auréole Bamba
Chinese mining giant CMOC disclosed its net profit for H1 2024 last week: $762 million. Year-on-year the figure soared by 670%, a performance attributed to significant production growth and “major advancements at its operations in the Democratic Republic of Congo (DRC)”.
Over the period reviewed, CMOC's copper production doubled to 313,788 tons and cobalt production surged by 178.22% to 54,024 tons.
CMOC reported that its TFM East plant in the DRC reached production targets for H1 2024, with “five production lines now operational”. This has helped push TFM’s annual production capacity to 450,000 tons of copper and 37,000 tons of cobalt–making the mine the world’s fifth-biggest copper mine and second-biggest cobalt mine. Meanwhile, KFM, CMOC’s other project in the DRC, maintained a “high production” with “an annual capacity exceeding 150,000 tons of copper and 50,000 tons of cobalt, solidifying its position as the largest cobalt mine in the world”. CMOC can thus produce 600,000 tons of copper and 87,000 tons of cobalt annually from these two projects.
Besides the rise in production, the Chinese giant attributed the surge in its net profits to other factors such as "the rise in metal prices on world markets, particularly for copper and cobalt". Cobalt and copper were the main drivers of CMOC’s profits but the firm also produces molybdenum, tungsten, niobium, and phosphate fertilizers.
CMOC’s success should help consolidate the DRC’s position in the global copper and cobalt market. The Central African country is the world’s top cobalt product and second-largest copper producer. This success also highlights the potential for increased government revenues from mining, through taxes and royalties, among others.
According to IMF data, the DRC’s mining revenues rose from an average of $4 billion between 2013 and 2017 to $5.5 billion from 2018 to 2022, "thanks to increased production of the main mining export products (copper and cobalt) and by the larger share of mining company profits attributed to the government".
Louis-Nino Kansoun