China not afraid of DRC adversity
China is making another big bet on copper in the Democratic Republic of Congo, deepening its presence in a country that has proved very difficult for western business.
China is making another big bet on copper in the Democratic Republic of Congo, deepening its presence in a country that has proved very difficult for western business.
The DRC holds huge reserves of copper but is also one of the hardest countries to navigate. It has problems with security, transparency and infrastructure. A case in point is Glencore, the biggest producer of copper in the DRC.
The company is facing three court cases and a possible UK bribery probe related to its dealings in the DRC, as well as a tax hike and tougher mining laws.
Citic Metal, a Chinese conglomerate, has agreed to spend about $555m for a 20% stake in Ivanhoe Mines, which holds the Kipushi zinc and Kamoa-Kakula copper projects. China’s Zijin Mining Group already owns almost 10% of Ivanhoe.
The investment shows how China, the world’s biggest commodity consumer, is looking to Africa to secure future natural resource supplies and is positioning industry to take advantage of the move to battery and electric-car technology. Electric vehicles and renewable applications use four times more copper than traditional cars and energy sources, according to Freeport-McMoRan.
“This is China in the ascendancy,” said Paul Gait, an analyst at Sanford C Bernstein & Co in London. “The West is losing its tolerance and appetite for securing what is necessary to power an economy.”
But it is not easy to mine in the DRC, which is the world’s sixth-biggest source of copper. In the last 10 years, other major competitors such as Rio Tinto Group and BHP turned away from its rich resources, while China’s influence is on the rise.
China Molybdenum bought a stake in one of the DRC’s biggest copper and cobalt mines, Tenke Fungurume, as part of a $3.8bn deal in 2017, while FreeportMcMoRan has left the country. China’s Zhejiang Huayou Cobalt is developing a copper mine near Kolwezi in the southeast.
In March, Glencore agreed to sell about a third of its cobalt output to GEM, a Chinese supplier of battery chemicals.