FEATURE
Copper , Africa ’ s oil ?
Until now , professionals in the mining sector thought that the charismatic Robert Friedland , CEO of Ivanhoe Mines , which is developing the Kamoa-Kakula copper megaproject in the DRC , was simply looking out for his best interests when he presented copper as the ‘ metal of the future ’ at his investor conferences .
Copper is currently trading at around $ 9,500 per tonne in London , which is already its highest price in a decade . A year ago in April , it was selling at below $ 5,000 per tonne , the same price it was going for in November 2015 and October 2016 .
Anton Löf , a metals market specialist at the Stockholm-based RMG Consulting , agrees for the most part with Goldman Sachs ’ analysis . “ The transition to a lowcarbon economy cannot happen without copper , which is both a key electrical conductor – far more efficient than other metals such as aluminium – and a crucial component for solar and wind power plants , electric vehicles and batteries , as well as energy-efficient buildings ,” he says . But while it takes about 10 years to get a copper project off the ground and three to five years to expand an existing mine , according to this specialist , there are not enough sites in operation or in the pipeline to meet the inevitable explosion in demand .
The irony of it all “ The environmental regulations for producing copper are also becoming increasingly strict , which makes it more expensive to produce ,” he says . Even though the current price is higher than in the past , it is not enough to make all mines profitable , which has led to a decrease in investment in the industry . The Swedish analyst also notes the irony of having , on the one hand , financial partners who are reluctant to support copper mining on the grounds of environmental and social risks , while at the same time championing an energy transition that requires its widespread use .
According to Löf , the African copper belt , which straddles the DRC and Zambia , should be the main region of the world – with South America to a lesser extent – to benefit from renewed interest from investors . Many of the African deposits – particularly in the DRC – contain not only copper , but also cobalt , which is another mineral that is crucial to the energy transition , as it is used to manufacture batteries for electric vehicles .
Another significant advantage , for companies based in the African copper belt , is that they have easier access than South America to Asian markets – especially China – thanks to logistics that are geared towards the major Indian Ocean ports of Dar es Salam and Durban , from where ore is shipped .
Finally , the cost of smelting ore – which transforms copper concentrate into pure ore – is currently very low , which benefits African producers who do not have foundries on site . They can therefore send concentrate to China to process at a lower cost . “ It is currently more profitable to invest in mine expansion than in foundries ,” says Löf .
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