Ivanhoe Mines (TSX: IVN; US-OTC: IVPAF) said its first shipment of copper concentrate from its Kamoa-Kakula copper complex in the Democratic Republic of Congo (DRC) had arrived by rail to the Angolan port of Lobito.
The trial run sent 10,000 tonnes of copper concentrate along the refurbished railway from the DRC through Angola. This Lobito Atlantic Railway Corridor has seen billions of dollars invested by China and others as a gateway to North America and Europe.
The first 1,100 tonnes were sent on Dec. 23 and arrived at Lobito on Dec. 31. The shipment shows that Ivanhoe could shorten its export route from Kamoa-Kakula by two-thirds, down to a total roundtrip lasting 20 days, simplifying logistics and cutting costs. A potential line extension could connect directly to the mine site instead of 50 km of trucking and serve other sites in the DRC’s Western Foreland area.
“This is important as Ivanhoe looks to further expand it exploration and development of the Western Foreland following the Kitoko discovery and maiden resources of Makoko and Kiala,” BMO Capital Markets mining analyst Andrew Mikitchook said in a note on Wednesday. “Logistic costs currently account for about 30% of total cash costs at Kamoa-Kakula largely attributed to its distance from international ports. With lower operating costs, copper cut-off grade can be concurrently lowered.”
Trucking costs
Currently, the Canadian miner trucks copper concentrates from Kamoa-Kakula across sub-Saharan Africa to the ports of Durban in South Africa and Dar es Salaam in Tanzania, as well as Beira in Mozambique and Walvis Bay in Namibia.
The rail line, linking the DRC Copperbelt to the port of Lobito in Angola, is known as the Lobito Atlantic Railway Corridor or Lobito Corridor. Credit: Ivanhoe Mines
Last year, nearly 90% of Kamoa-Kakula’s concentrates were shipped to international customers from the ports in South Africa and Tanzania, with an average round-trip taking between 40 and 50 days.
“Our first trial shipment is an important milestone on the path to creating a new supply chain linking the Central African copperbelt to world markets,” Ivanhoe Mines founder and co-chairman Robert Friedland said in a statement.
“Establishing a reliable, modern rail link to the port of Lobito in Angola will have transformational benefits for the people of the Democratic Republic of the Congo, Angola and Zambia.”
Civil war
The rail line dates from Portuguese colonial times in Angola as the Benguela railway, but was destroyed during the decades-long civil war on and off from 1975 to 2002. China poured some US$2 billion into restoring the route which was supposed to restart a decade ago.
In July, giant commodities trader Trafigura said it was investing US$555 million to link it to the DRC mining town of Kolwezi. The United States has also said it plans to invest some US$600 million along the corridor in similar projects to access DRC and Zambian copper.
Once fully active, the line is expected to not only to improve logistics costs, but also to reduce carbon emissions from getting copper to market.
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