Cover Story: China Digs In to Boost Mining in Democratic Republic of Congo (AI Translation)
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文｜财新周刊 罗国平 发自刚果（金）卢本巴希
By Luo Guoping, Caixin Weekly, reporting from Lubumbashi, DR Congo
在地处非洲腹地的刚果（金）南部加丹加高原，有一片面积近1.5个中国香港大小的山地。这里是刚果（金）大型铜矿山TFM（Tenke Fungurume Mining，腾科丰谷鲁美矿）所在处，4座大型冶炼厂过去五年在此拔地而起，14个大矿坑正在同步作业，2024年成为全球最大的铜增量供应输出地。
In the southern Katanga Plateau of the Democratic Republic of the Congo, an area nearly 1.5 times the size of Hong Kong lies nestled in the heart of Africa. This is the site of the Tenke Fungurume Mining (TFM), a major copper mine in the DRC. Over the past five years, four large smelters have sprung up here, and 14 major mining pits are currently in operation. By 2024, this site is set to become the largest contributor to the global increase in copper supply.
来自中国河南西部县城洛阳栾川的民营企业洛阳钼业（603993.SH/03993.HK，下称“洛钼”）和代表刚果（金）政府的国家矿业总公司杰卡明（Gécamines），分别持有TFM 80%、20%（不可稀释干股）的股权。历经近两年艰难博弈，在被限制产品出口10个月等极限施压之后，洛钼有坚持也有妥协，终与刚果（金）政府达成新的利益平衡：一方面保住了股比和实控人地位；另一方面承诺六年上交8亿美元新增储量的权益金，以及给予国有份额相应的铜、钴产品包销权。
The private enterprise Luoyang Molybdenum (603993.SH/03993.HK), also known as "Luo Mo," based in Luoyang Luanchuan, a county in western Henan, China, and Gécamines, the state-owned mining company representing the government of the Democratic Republic of the Congo (DRC), hold 80% and 20% (non-dilutable shares) of TFM, respectively. After nearly two years of arduous negotiations, including a ten-month suspension of product exports as a form of extreme pressure, Luo Mo both stood firm and compromised, ultimately reaching a new balance of interests with the DRC government. Luo Mo retained its equity ratio and status as the actual controlling shareholder while committing to pay $800 million over six years for the rights to new reserves and granting the state-owned entity the right to exclusively sell the corresponding copper and cobalt products.
全球大宗商品在新冠疫情之后进入一轮上行周期，尤其是铜矿供应趋紧，杰卡明转头就将自己的包销份额卖给三大商品贸易巨头——嘉能可（Glencore）、摩科瑞能源集团（Mercuria Energy Group）和托克集团（Trafigura Group）。
In the wake of the COVID-19 pandemic, global commodities have entered an upward cycle, particularly with a tightening supply of copper mines. In response, Jiang Keming promptly sold his underwriting shares to three major commodity trading giants—Glencore, Mercuria Energy Group, and Trafigura Group.
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- The Tenke Fungurume Mining in the Democratic Republic of the Congo is a major player in copper production, expected to significantly increase global supply by 2024.
- China, specifically Luoyang Molybdenum and other Chinese enterprises, has made significant investments in DRC's mining sector, contributing over 70% of its copper output.
- Challenges in the DRC include a weak state authority, inadequate governance, high costs, and poor infrastructure, yet Chinese companies see opportunities similar to earlier stages in China's development.
In the southern Katanga Plateau of the Democratic Republic of the Congo (DRC), Tenke Fungurume Mining (TFM) has become a major site for copper extraction. Luoyang Molybdenum (Luo Mo) and Gécamines, a state-owned mining company, own TFM, holding 80% and 20% shares, respectively. After complex negotiations with the DRC government, Luo Mo maintained its control while agreeing to pay $800 million over six years for new reserves. This agreement also granted Gécamines exclusive sale rights for copper and cobalt products derived from those reserves [para. 1][para. 2][para. 3].
The global demand for copper, driven by advancements in energy transition technologies and AI, has surged. Following the COVID-19 pandemic, investments have intensified, particularly in projects focused on copper extraction due to rising demand from industries like electric vehicles and data centers. The London Metal Exchange (LME) copper futures even witnessed historic highs due to this burgeoning demand [para. 4][para. 5].
China Molybdenum (CMOC), operating the Tenke Fungurume mine, plans to increase copper production by 60% in 2024. Along with its Kisanfu Mining project, CMOC aims to increase its copper output by 43%, seeking to become a major global mining enterprise by achieving a medium-term copper output target of 800,000 to 1 million metric tons by 2028 [para. 6][para. 7][para. 9].
The Democratic Republic of the Congo, endowed with vast copper and cobalt reserves, has become a focal point for Chinese mining investments. Chinese enterprises dominate over 70% of the DRC's copper production. Meanwhile, investments from Western nations have dwindled, primarily due to financial crises and geopolitical considerations, leaving only a few Western companies operating in the region [para. 10][para. 11][para. 12].
Challenges persist in the DRC due to low electrification rates, weak infrastructure, and endemic corruption. The mining sector remains critical, contributing significantly to the GDP despite economic instability. With industrialization as an overt strategy for economic development, significant investments aim to address infrastructure deficits and support mining operations [para. 13][para. 14].
Chinese companies face operational challenges but maintain an optimistic medium-to-long term outlook for copper investments. Despite low per capita GDP and high poverty rates, the DRC holds immense resource potential crucial for meeting the global energy sector's needs. Chinese enterprises see parallels between the DRC's current stage and China’s development during the 70s and 80s, encouraging a developmental standpoint in addressing local issues [para. 15][para. 16][para. 17].
In the international arena, the DRC has become a battleground for geopolitical rivalry, notably between China and the US. President Félix Tshisekedi has expressed intentions to leverage strategic mineral resources, balancing international relationships to share the wealth generated during the clean energy transition [para. 20][para. 21].
China's "Belt and Road" strategy in Africa underpins its investments in copper and cobalt mining through collaborative projects that secure material supply lines crucial for high-tech industries and helps establish a robust upstream resource foothold. While Chinese investments face geopolitical tensions, they capitalize on efficiencies in cost management and execution capabilities to undertake strategic mineral resource extractions [para. 30][para. 31].
African infrastructure lags, impeding efficient exploitation of resources, but ongoing projects aim to alleviate logistical burdens, striving for significant advancements in sectors such as logistics, power generation, and transportation. The pragmatic approach promotes transformative partnerships, encouraging international interest to realize African nations' potential in the global supply chain. Stability, strategic minerals, and the geometric growth of technological demands position the continent at the core of an evolving resource acquisition strategy, illustrating how China navigates geopolitical nuances and operational challenges in African markets [para. 35][para. 38].
- China Molybdenum
洛阳钼业 - China Molybdenum (洛阳钼业) is a private Chinese company holding 80% of the Tenke Fungurume Mining (TFM) in the Democratic Republic of Congo, with the government holding 20% through Gécamines. The company plans to increase copper production at TFM by 60% in 2024. Having acquired TFM from Freeport for $3.75 billion, and adding Kisanfu Mining, China Moly aims to expand its copper production to 80-100 million tons by 2028.
- Glencore
嘉能可 - Glencore is mentioned as one of three major commodity trading giants that purchased the distribution rights for a portion of the produce from the Tenke Fungurume Mining (TFM) in the Democratic Republic of Congo (DRC). It is headquartered in Switzerland and has been involved in DRC for a long time, where it operates world-class copper and cobalt mines. Glencore faced corruption and market manipulation allegations, leading to a $15 billion fine to resolve investigations.
- Mercuria Energy Group
摩科瑞能源集团 - Mercuria Energy Group is mentioned in the article as one of the three major commodity trading giants that the state mining company Gécamines in the Democratic Republic of Congo sells its copper and cobalt product allocation to. The other two trading giants are Glencore and Trafigura Group.
- Trafigura Group
托克集团 - Trafigura Group is identified as one of the three major commodity trading giants that entered into agreements with Gécamines, representing the Democratic Republic of the Congo government, to purchase its copper and cobalt product quotas. Trafigura, along with Glencore and Mercuria Energy Group, is involved in the trading of these resources from the Tenke Fungurume Mining (TFM) in the Democratic Republic of the Congo, which is a significant site for copper production.
- Freeport-McMoRan
美国自由港 - Freeport-McMoRan is mentioned as the previous owner of the Tenke Fungurume Mining (TFM) in the Democratic Republic of Congo. They sold TFM to China Molybdenum (洛钼) for $3.75 billion due to financial strains and a need to reduce leverage amid a downturn in commodity prices around 2015-2016. TFM was among Freeport’s four core assets but was sold as it was the smallest and the country posed challenging conditions.
- China Railway Group
中国中铁 - China Railway Group, through its subsidiary China Railway Resources, operates Huagang Mining, which was the first large-scale Chinese mining project in the Democratic Republic of Congo (DRC). Huagang Mining commenced its first phase in 2015, achieving a copper production capacity of 250,000 tons annually. China Railway Group's involvement in DRC began in 2007 with infrastructure projects, marking its longstanding presence and contribution to local development.
- Minmetals Resources
五矿资源 - Minmetals Resources acquired Canada's Anvil Mining in 2012 for 13.3 billion Canadian dollars, focusing on the Kinsevere project in the Democratic Republic of the Congo (DRC). This project's annual production capacity remained around 40,000 tons, until expansion efforts began in 2022. The expansion is expected to be completed by September 2024, increasing the annual copper production capacity to 80,000 tons.
- Jinchuan Group
金川集团 - Jinchuan Group, a Chinese state-owned mining company, acquired South African Metorex in 2012 for $1.28 billion, securing copper and cobalt mines in the Democratic Republic of Congo, including the Ruashi project. Initially maintaining the original management team, Jinchuan fully took over operations in 2014, implementing cost-cutting measures. The company focuses on maximizing resource use by mining lower-grade ores, sustaining operations beyond the original mine closure timeline.
- Zijin Mining
紫金矿业 - Zijin Mining invested in the Commus copper-cobalt mine in the DRC, acquired from Huayou Cobalt in 2014, with production beginning in 2017. It also invested in the Kamoa-Kakula copper project, one of the most significant global copper discoveries in the past 20 years. With the first phase operational in 2021, Kamoa was set to become Africa's largest copper mine. Zijin aims to expand further, targeting over 80,000 tons of copper annually by 2029.
- Huayou Cobalt
华友钴业 - Huayou Cobalt, a Chinese enterprise, is involved in the large-scale mining investments in Congo (DRC). It holds a small stake in Sicomines, a major mining company in the region, and stands among other Chinese firms like China Railway and China Molybdenum. Huayou Cobalt's activities in the region are part of China’s broader strategic investments in the Democratic Republic of Congo’s rich copper and cobalt resources.
- JCHX Mining Management
金诚信 - JCHX Mining Management, also known as 金诚信 (Jin Chengxin), is involved in mining services and has expanded into resource development since 2019. In the Democratic Republic of Congo, it has acquired projects like Dikulushi Copper Mine and Lonshi Copper Mine, contributing to its operations in the region.
- Shenghe Resources
盛屯矿业 - The article does not mention Shenghe Resources. It primarily focuses on the involvement of Chinese companies such as China Molybdenum (洛阳钼业), China Railway Group (中铁资源), Northern Mining, and others in Congo's mining sector, particularly in copper and cobalt mining.
- Ivanhoe Mines
艾芬豪矿业 - Ivanhoe Mines, a Canadian-listed company, is one of the few Western foreign firms remaining in Congo (DRC) after many others exited due to the global financial crisis and sovereign risk assessments. Ivanhoe Mines is involved in one of the largest copper discoveries in the past 20 years, the Kamoa-Kakula project, which it jointly owns with Zijin Mining, both holding 39.6% equity.
- CATL
宁德时代 - CATL (Contemporary Amperex Technology Co. Limited) strategically invested in the Kisanfu Mining (KFM) project by acquiring a 23.75% stake from Luoyang Molybdenum (洛钼). This move supports Lithium-ion battery production by ensuring a supply of cobalt, a key component. Additionally, CATL's investment extends its influence in raw material sourcing, aligning with its energy storage and electric vehicle battery ambitions. The acquisition was completed in 2020 for $5.5 billion.
- BHP
必和必拓 - BHP, a mining giant, was active in the Congo (DRC) early on, setting up offices and exploring copper and diamonds. It also discussed building an aluminum smelter and investing in the third phase of the Inga hydropower project. However, due to economic factors, none of these projects were deemed viable, leading BHP to gradually withdraw and fully exit the DRC by 2012.
- Back in 2016-2017：
- CMOC acquired TFM for a total of $3.75 billion from Freeport-McMoRan.
- After 2019：
- Significant expansion of TFM began following a change in the Western management team.
- August 2021：
- CMOC invested an additional $2.51 billion to build three new production lines at TFM.
- By 2024：
- TFM is set to become the largest contributor to the global increase in copper supply.
- Since 2024：
- Rapid advancements in energy transition and AI lead to soaring demand for basic materials, affecting copper market.
- Late May 2024：
- LME copper main futures contract, 'London Copper,' soared to a historic high of $11,100 per ton.
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