Ivanhoe Mines seeking strategic partner to mine more copper in Congo

Friedland at the Investing in African Mining Indaba in Cape Town. (Photo by Henry Lazenby.)

Ivanhoe Mines (TSX: IVN) is in talks with potential partners to develop copper assets in the Democratic Republic of Congo (DRC), as the world faces a global copper shortage, fuelled by fresh challenges to supply streams and higher demand.

“We’re in all kinds of strategic discussions and you know, most of the most interesting investors tend to be sovereign investors,” Ivanhoe Mines founder Robert Friedland told Bloomberg TV. “We only want to do things that help it to grow.”

The shift toward decarbonization will require vast amounts of copper to produce electric vehicles (EVs), extend transmission lines and install new wires in renewable power sources.

Very few major copper mines have started operations in recents years, with only two opened between 2017 and 2021, according to the International Copper Study Group (ICSG).

While there are now four mines coming on stream or ramping up almost simultaneously — Kamoa-Kakula in Congo, Quellaveco in Peru and Quebrada Blanca II and Spence-SGO in Chile — main market players are still predicting a massive supply shortfall by 2030.

Speaking this week in South Africa at the Indaba conference, Friedland said 700 million tonnes of copper had been mined in human history and a further 700 million tonnes would be needed in the next 22 years just to keep annual global growth rates of 3%.

The mining veteran made his fortune from the Voisey’s Bay nickel project in Canada in the 1990s. Since then, he has been involved in some of the biggest mineral discoveries in the world, including the giant Oyu Tolgoi copper mine in Mongolia and the Kamoa-Kakula project in the DRC.

The Congolese copper mine produced 333,500 tonnes of the metal in 2022, more than double its output a year earlier. It’s currently undergoing an expansion (Phase 3), which will push production numbers up to 620,000 tonnes a year by 2024, when completed. 

Growing interest

Friedland is not alone in touting Africa as a copper haven. Eurasian Resources Group’s chief executive officer, Benedikt Sobotka, said earlier this week that the company would spend $1.8 billion to double its copper and cobalt output in the continent.

ERG produces 200,000 tonnes of copper and 25,000 tonnes of cobalt a year from its mines across the central African copperbelt.

The US government inked in January a memorandum of understanding to jointly develop a supply chain for EV batteries.

“It should have happened 30 years ago,” Friedland said. “Five American administrations slept walked through this requirement, and the Americans are remembering how critically important Africa is.”

Yet, the US government hasn’t added copper to its list of critical metals, he noted.

Chile is the world’s largest copper producer and accounted for 27% of global supply in 2021, according to the World Economic Forum. The country, however, is facing declining ore grades and climbing costs, recording a 7% year-on-year production decline in November. 

“Chile cannot grow their production for the new economy, they just can’t,” Friedland said. “Unless this is completely reinvented, there is no hope for an energy transition.”

~ With files from Bloomberg