Ah, that Ivanhoe !!
Robert Friedland has found and built another of the world’s great copper mines, this time at Kamoa-Kakula in the DRC.
The dirt at Kamoa-Kakula is fabulously rich in copper and much of the power for the mine comes from carbon-free hydroelectric generators nearby.
Production has been under way for just over three years, but already Kamoa-Kakula is the world’s fourth-biggest copper producer. If expansions go to plan, it could sneak into second place by 2028.
At a time when BHP and Rio are hungry for copper and pulling the trigger on acquisitions, it’s curious that Ivanhoe and Kamoa-Kakula haven’t yet caught a bid.
.... A bid for Ivanhoe – which owns 39.6 per cent of Kamoa-Kakula – would be simpler to complete and should be doable at half the price.
The big Australian miners are impressed by what Friedland has created in the DRC; a delegation from Rio have visited Kamoa-Kakula, and according to those within earshot, the delegation left the DRC thinking they had seen the world’s best copper mine....
...DRC’s traditional reputation for sovereign risk (has improved); miners are generally encouraged by the way DRC president Félix Tshisekedi has prioritised investment into the DRC from American and European sources.
Tshisekedi has been rewarded by the US State Department for his perceived progress on human rights and anti-corruption measures, winning greater access to US markets under the Africa Growth and Opportunity Act (AGOA).
Senior people now believe the DRC is investible for the right project; an extraordinary notion given the DRC was a byword for corruption and child labour barely a decade ago...
... the perceived problem with Kamoa-Kakula: transport and logistics.
The mine is land-locked about 1700 kilometres from the coast as the crow flies.
The vast majority of the copper produced at Kamoa-Kakula over the past three years has been trucked up to 3000 kilometres to ports like Durban in South Africa, Dar es Salaam in Tanzania, Walvis Bay in Namibia or Beira in Mozambique.
View attachment 190608
A return journey from Kamoa-Kakula to Durban often took 45 days, and rose to 70 days with congestion. Border crossings in Africa only create potential for complications.
The logistical cost of getting Kamoa-Kakula’s copper to port has been approximately 30 to 40 per cent of the mine’s C1 unit cost in recent years. According to Ivanhoe’s market filings, the C1 unit costs at Kamoa-Kakula were $US1.69 per pound in the September quarter.... (which are) competitive with the C1 costs BHP expects in the year to June 2025 at Escondida - between $US1.30 and $US1.60 per pound - and its South Australian copper mines at between $US1.30 and $US1.80 per pound.
Those two BHP copper hubs are 170 kilometres and 560 kilometres from port respectively, and they also have shorter shipping journeys to customers in North Asia.