By Victor Akan
IN a significant shift towards capturing greater value from their vast copper resources, Africa’s two largest copper producers – the Democratic Republic of Congo (DRC) and Zambia – are finalising strategic deals to enter the metals trading arena. Traditionally dominated by international trading houses such as Glencore, these moves come as a response to a surge in global demand for copper, fuelled by the rise of artificial intelligence and the transition to greener energy sources.
A new chapter for copper trading
Representing over 13 percent of global copper supply, the DRC and Zambia are seeking to capitalise on their natural wealth by moving beyond traditional export models. According to Reuters, Congo state-owned miner Gecamines is on the verge of sealing an agreement with Glencore to secure an allocation of about 51,000 metric tons of copper from the Kamoto Copper Company (KCC). With Gecamines owning a 25 percent stake in KCC, sources familiar with the deal told Reuters that the allocation would be proportional to its shareholding. Although Glencore declined to comment, this development marks a deliberate effort by the Congolese authorities to capture a greater share of the profits from the metal they mine.
Government control and strategic partnerships
Further signalling a broader strategy, the Congolese government is pushing for enhanced oversight over the sale of copper from projects where it holds stakes. In a parallel effort, Gecamines has already traded nearly 100,000 tonnes of copper corresponding to its 20 percent shareholding in Tenke Fungurume Mining following a deal with Chinese owner CMOC Group in July 2023. In addition, Congo’s involvement extends to its 20 percent stake in Ivanhoe’s Kamoa-Kakula mine, which is projected to produce between 520,000 and 580,000 tonnes of copper this year.
These moves are part of a wider strategy to allow resource-rich nations to participate directly in metals trading. Reuters reports that Gecamines is also looking to secure additional copper from its shareholdings in other major producers, including Zijin Group, thereby increasing its exposure to a market that has hitherto been the preserve of global trading giants.
Market implications and investor cautions
The surge in copper demand is driven by its critical role in powering artificial intelligence, electric vehicles, and renewable energy projects. However, investors have expressed caution. African governments are seen as high-risk partners due to historical disputes over profit-sharing and control. Verisk Maplecroft’s Resource Nationalism Index categorises both the DRC and Zambia as challenging investment environments. Some analysts warn that attempts by governments to capture a larger slice of the trading pie might unsettle private investors, potentially leading to disputes over production divisions and trading rights.
Collaborative ventures on the rise
In a bid to mitigate these risks and leverage external expertise, joint ventures have begun to take shape. For example, Swiss trader Mercuria has made inroads in Zambia, setting up a jointly owned copper trading unit with the Zambian government in December. With an initial budget of around $500 million earmarked for purchasing copper from local producers, Mercuria’s involvement is seen as a potential catalyst for further market reforms and enhanced investor confidence.
As global market participants gather at next week’s Mining Indaba conference in Cape Town, the evolving dynamics of copper trading in the DRC and Zambia are likely to dominate discussions. With heightened demand and a shift towards value-added trading, both governments are betting on these new deals to transform their economies. While the path forward may be fraught with challenges, the drive to secure a more direct share of profits marks a decisive move towards a more sovereign control over Africa’s mineral resources.
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