Ivanhoe Mining Corporation (TSX:IVN) on May 28 evening responded to media reports that DRC Mining Corporation had received an order from the government on May 26 banning the export of copper and cobalt concentrate from the country.
Ivanhoe said it was aware of an executive order issued to customs officials by the head of the Katanga Customs and Excise Bureau.
However, another letter was subsequently received confirming that the company holding the derogation letter issued by the Minister of Mines of the State would be allowed to export concentrate.
The previous government-issued policy on derogations from the industry-wide concentrate export ban expired on April 12, 2021, and has been replaced by a new framework that allows the Minister of Mines to grant individual derogations on a case-by-case basis following an application by the interested party.
'The concentrate export ban is not a new policy,' said Marna Cloete, president and chief financial officer of Ivanhoe Mines. 'What we have now confirmed is that we need to state the reason for the loss.'
Kamoa has submitted the necessary application materials to the government and, in view of the current smelting capacity constraints in the country, the company has been in constructive discussions with the Minister of Mines regarding the derogation of Kamoa.
Ivanhoe also says it intends to make the most of the capacity of its local smelters. (See Kaola's "New Ideas to Solve New Problems as China Enters a New Era of Mining Investment in Congo: Medium-sized Congolese Kindizwa Copper-Cobalt Mine and LCS Pyrometallurgical Plant.")
Ivanhoe and Zijin also announced in March that they were evaluating the construction of a complementary smelter for Kamoa to produce both crude and anodised copper.
Ivanhoe also points out that the government of the Democratic Republic of Congo owns 20% of Kamoa, and in the announcement it snarky posted a photo of Mr Cloete and Mr Motlanthe, a former South African president and Ivanhoe's independent director, with President Tshisekedi Jr.
Just the day before yesterday, Ivanhoe and Zijin Mining announced that Kamoa-Kakura Phase I was put into operation on May 25 and the first concentrate was produced.
This marks the completion of a world-class copper mine in the hands of mining legend Robert Freeland after he successively sold Violey Bay and OT two world-class greenfield assets.
The project, which brought together the likes of Zijin, Ivanhoe and CITIC Metals, took only five years from discovery to completion and is one of the most closely watched overseas mine projects under construction in the industry.
Koala wanted to write something about the launch, but when she saw the official reports that everyone was switching to purple and gold and Ivanhoe, she didn't have to gild the lily.
Early this morning, the reporter Lao Tang sent Reuters news about the ban on the export of gold concentrate from Congo. Since Kamoa has just started production, the news is obviously getting heat, and investors are wondering whether Kamoa will stop production as soon as it starts.
To this end, the koala replied to Lao Tang with two words:
"It's not a big surprise,
It's not a big deal."
Unexpectedly morning various news public number in succession to this event to do the report, there are people asked about the impact of purple gold.
At this time, the mining public number Conscience "18 Bronze Men" spoke out to interpret the government ban and expressed support for Ivanhoe.
Koala can not help but praise, the industry or a wise man.
Congo's ban on concentrate exports is certainly not news.
This is also a common policy of many resource countries, mainly in the hope of getting more value-added at home.
Although it is the world's third largest copper producer, due to its copper-cobalt co-existing ore nature, the country's mines are generally hydrometallurgical copper and cobalt extraction, and few concentrates are produced as the final product. Some concentrates are sold to the CCS smelter in Zambia with special permission from the government.
Kamoa, due to its special ore properties (primary copper sulfide, no cobalt), must have been prepared for the production of concentrates and for government export permits, which Ivanhoe is believed to have made.
In February, Ivanhoe demonstrated its savvy government-relations approach by becoming the first mining company to publicly endorse President Qi's presidency of the African Union.
In a press release announcing Kamoa's launch, Ivanhoe also quoted President Zaki as saying: "The commencement of copper concentrate production at Kamoa Kakura demonstrates that the Democratic Republic of the Congo is open for business and investment.
We congratulate Ivanhoe Mines on achieving an important milestone in this world class mineral discovery."
Chinese elements of Kamoa
While the Kamoa-Kakura project has been spearheaded by Ivanhoe's South African team, the investment and development process has also been fraught with Chinese elements.
Ivanhoe and Kamoa's shareholders include Zijin Mining and CITIC Metals, two major Chinese companies. Kamoa's management also has COO and Co-CFO from Zijin, as well as technical and managerial personnel at all levels.
In particular, CITIC Metal's investment and Zijin Mining's active cooperation ensured that the Kamoa project was completed in less than two years.
(See Kaala's article "Zijin Mining Group increases its stake in Ivanhoe by 1 billion yuan and becomes the second largest shareholder, Kamoah copper mine project announces the core management team", "CItic Metal gets all the approvals needed to issue additional shares in Ivanhoe, the deal is expected to be completed as scheduled")
The main contractors for the project include Jin Chengxin, China Railway No. 9 Engineering Bureau, 15 MCC, CITIC Construction, Zijin Construction, as well as some small and medium-sized Chinese-backed contractors.
These first-rate contractors in China have shown strong learning ability, management ability and adaptability. They not only adapt to the westernized owner management mode, but also demonstrate the unique perseverance and pursuit of excellence of the Chinese people. They have made great contributions to the rapid completion and operation of the project.
During the construction phase, the project faced the great challenge of traffic congestion caused by the COVID-19 epidemic. Kamoa used to charter planes, and the owner and contractor's staff flew in and out, ensuring the continuous construction of the project.
Many of our friends on the ground have been unable to return home for more than a year and have made great sacrifices.
(on moire progress at the same time, the koala is helping a international mining company in Dr Congo's project owner construction team, it's going to be a Chinese mining company in Dr Congo and even the world's first comprehensive introduction of advanced international mining project development and management concept and combined with local advantage resources mining development team, the core staff has been ready,
Looking forward to your participation, interested parties can contact with koala WeChat)
Future: Possible to become the world's second-largest copper mine
Based on Ivanhoe's production guidance targets, Kamoa-Kakura is expected to produce between 80,000 and 95,000 tonnes of copper in concentrates for the rest of 2021, making it one of the top five copper miners in the country.
Kakura Phase I will initially produce 3.8 million tonnes of ore per annum, followed by an increase to 7.6 million tonnes per annum in Q3 2022.
The first phase of production is expected to produce approximately 200,000 tons of copper per year, while the second phase will produce a combined 400,000 tons of copper per year.
Not long ago, China Enfei won the EPCM project management contract for Phase 2A expansion project.
Ivanhoe China has also hired senior experts in the industry to participate in the coordination and management of technology factors in China.
Ivanhoe also said that given the current copper price trend, Ivanhoe and Zijin Mining are actively looking to accelerate the Kamoa Kakura Phase III expansion to increase the plant's capacity from 7.6 MMtpa to 11.4 MMtpa,
The ore will be supplied by the expansion of the Kansoko mine or the new mining areas of Kamoa North (including the bonanza zone) and Kakura West.
The ultimate development goal is to expand capacity to 19 million tons per year of ore processing, which will make Kamoa-Kakura the world's second largest copper mine, with a peak annual output of more than 800,000 tons of copper.
