Ivanhoe, Trafigura to be first users of African rail through Angola

Canada’s Ivanhoe Mines (TSX: IVN; US-OTC: IVPAF) and commodities trader Trafigura on Wednesday made a deal  to transport copper by rail from the Democratic Republic of Congo (DRC) to neighbouring Angola’s port of Lobito.

The agreement makes the companies the first long-term users of the Lobito Atlantic railway corridor, an initiative backed by the U.S. government as part of its stated ambition to challenge China’s dominance of critical raw materials.

The Biden administration has committed US$250 million to revitalize the century-old rail line linking key African mines to the Atlantic Ocean port of Lobito. It’s also funding a study to connect the railway into Zambia, as part of another project expected to cost US$1.6 billion.

The agreement with Ivanhoe gives it the right to transport between 120,000 and 240,000 tonnes of blister-anode or concentrate per year from its Kamoa-Kakula mine along the Lobito Corridor. 

It outlines a minimum term for the agreement of five years starting in 2025, following a ramp-up in 2024. 

In January, Ivanhoe sent a trial shipment of copper concentrate from Kamoa-Kakula DRC to the port of Lobito using the new railway. The shipment demonstrated 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. The Canadian miner had been trucking 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.

Last year, almost 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.

Current export routes used by Kamoa-Kakula in red and the Lobito Railway Corridor route in orange. Credit: Ivanhoe Mines

 

 

 

 

Cost savings

The deals inked today extend the initial trial shipments, announced in August last year, with up to a further 10,000 tonnes to be transported along the Lobito Corridor this year. 

“The transformative economic corridor will unlock more copper projects due to the lower logistical costs,” Ivanhoe Mines’ founder and executive co-chairman, Robert Friedland, said in a statement. “Cheaper logistics increase the amount of economically recoverable copper across the Copperbelt, as cut-off grades can be lowered.”

The Lobito Atlantic Railway consortium, comprising Trafigura, Mota-Engil and Vecturis, was awarded in 2022 a 30-year concession for the operation, as well as management and maintenance responsibility of both the rail line and the port.

“Trafigura has now signed a term sheet over a minimum term of six years, supporting the consortium’s aim to grow the volumes on the corridor so that it becomes the leading rail transport link in sub-Saharan Africa,” the group’s executive chairman and chief executive, Jeremy Weir, said.

Trafigura’s allocation of export capacity on the Lobito railway will be up to 450,000 tonnes per annum from 2025, it said in a separate statement.

According to the commodities trader, the Lobito Atlantic Railway concessionaires have plans to increase the export capacity of the line to one million tonnes per year by 2030.