Africa’s big copper countries set their sights on the profits of trade

Africa’s biggest copper producers, the Democratic Republic of Congo and Zambia, are working on deals to gain exposure to metal trading as a demand surge linked to artificial intelligence and the shift to greener energy promises hefty profits.

Metals trading has long been the preserve of international trading houses, such as Glencore (GLEN.L), opens new tab.

Congo and Zambia, which together represent more than 13% of global copper supply, have over the last year increased their focus on securing a share of the mined metal that they too can trade for profit.

Congo state-owned miner Gecamines is close to finalising a deal with Glencore (GLEN.L), opens new tab to secure an allocation of about 51,000 metric tons of metal from Kamoto Copper Company (KCC), two sources familiar with the details told Reuters. They did not indicate any date for finalising the agreement.

Glencore declined to comment.

Gecamines owns 25% of KCC and is negotiating for an allocation of the metal equivalent to its shareholding in the mine, the sources said.

Gecamines has already been trading almost 100,000 tons of copper, equal to its 20% shareholding in Tenke Fungurume Mining after reaching a deal with Chinese owner CMOC Group (603993.SS), opens new tab in July 2023.

Gecamines Chairman Robert Lukama did not immediately respond to Reuters’ questions.

The Congolese government is meanwhile seeking greater control over the sale of the metals in projects where it holds a stake, one of the sources said.

Congo owns 20% in Ivanhoe’s (IVN.TO), opens new tab Kamoa-Kakula mine, which aims to produce 520,000-580,000 tons of copper this year.

Ivanhoe declined to comment.

Gecamines also aims to secure more metal from its shareholding in producers including Zijin Group (601899.SS), opens new tab, the source said.

All the sources asked not to be named because they were not authorised to speak publicly.

CAPE TOWN INDABA

The quest for copper is likely to be keenly debated when global investors, executives and government officials gather at next week’s Mining Indaba conference in Cape Town.

African governments’ efforts to maximise their share of profits, which historically have been concentrated in the hands of international companies, will also be a sensitive issue following events this month in Mali, where gold mining executives were arrested to force compliance with new mining rules.

The potential profits of copper could be huge as demand is stoked by its uses in AI, electric vehicles and the transition to greener power, while new supplies are hard to find, increasing the bargaining power of the resource-holders.