Canada’s Ivanhoe to start copper production at new DRC mine in 2018
Canada’s Ivanhoe Mines (TSX: IVN) expects to begin mining copper from its giant Kamoa project in the Democratic Republic of Congo in late 2018, as the company foresees a looming deficit in the market and rising global demand.
The Vancouver-based miner believes conditions should favour the launch of the mine, located around 25 km. west of the major mining town of Kolwezi, in the Katanga copper belt.
"Even if China is running out of steam or slowing down today, other countries are still asking for copper,” said Louis Watum, the head of Ivanhoe DRC, AFP reports. So in the two or three years (to come) we can easily foresee a deficit of copper on the market just as we go into production," he added.
China’s Zijin, a large gold, copper and zinc producer, agreed in May to pay $412 million for a 49.5% stake in Kamoa Holding, the Ivanhoe’s unit that owns the majority of the Kamoa copper project in Congo’s southern province of Katanga.
The deal came just two months after the firm agreed to acquire a nearly 10% stake in Ivanhoe for about $85 million.
Copper prices, however, are not helping to boost enthusiasm for the new mine. The industrial metal has fallen about 25% in the last 12 months as a result of excess in the market.
“It’s just not making sense. We’ve never seen copper inventories down at these levels and prices, because these levels, you normally have a much higher copper price,” said Glencore’s CEO Ivan Glasenberg during the company’s earnings call Aug. 19.
Many blame China, the world’s No.1 source of metals demand, for souring the mood in the market. On Monday, the country reported its slowest economic growth since the financial crisis, at 6.9% in the third quarter.
“The positive effect from cuts is rapidly waning as investors are concentrating more on the demand side, on Chinese weakness, and they got one more evidences of it in data from the beginning of this weak,” Julius Baer analyst, Carsten Menke, told The Wall Street Journal.
Ivanhoe Mines estimates that Kamoa, discovered in 2007, holds the equivalent of at least 45 million tonnes of pure copper. The company aims to extract 300,000 tonnes per year once the mine is operating at full tilt.
The Africa-focused miner expects a feasibility study, as well as the joint venture with Zijin and the Congolese state, to be completed by year-end.