Trafigura secures off takers for DRC mine

Photo credit: Ver Angola

Singapore-headquartered Swiss commodity trader Trafigura and the Kamoa-Kakula copper mine in the Democratic Republic of Congo (DRC) have signed agreements to become the first long-term off-takers for the transportation of minerals via the Lobito Atlantic Railway. This rail line connects the DRC's copper and cobalt mining region with the port of Lobito in Angola.

Trafigura is part of a consortium that recently signed a 30-year concession agreement worth US$450m for the operation and maintenance of the 1300km railway line connecting the Lobito port in Angola to Luau, near the border of the DRC. Its consortium partners include Portuguese construction firm Mota-Engil and Belgium-based rail operator Vecturis. This concession also encompasses the management of the Lobito Minerals port. From Luau, there is a rail line extending 400km to the mining city of Kolwezi, connecting with the rail network run by the National Railway Society of the Congo. For the mining industry, the railway – expected to reach an annual export capacity of 1m tonnes before the decade's end – offers the quickest, most direct route to the port from Kolwezi. However, the line is in such poor state that even trains move at an average speed of 10kmph.  

Washington is gambling that the US$2.3bn Lobito corridor linking DRC, Zambia and Angola will provide the battery metals to power its green transition. But with China carrying more than 80% of the global critical minerals processing capacity it remains to be a seen if this gamble will pay off. Copper, cobalt, and other raw materials are expected to stay in high demand as energy transition gains pace. Currently, these metals are transported via Dar es Salaam in Tanzania, through Beira in Mozambique, or southward via Durban in South Africa, a journey that can last several weeks. The distance from Kolwezi to Lobito is roughly half that to Durban. With the growth in export volumes, road congestion and border delays have worsened. This new export route, which leverages existing national rail infrastructure, aims to alleviate road congestion, and minimise border delays. It takes trucks off the roads and offers notable cost and time savings for miners in the Copperbelt to reach international markets.

Trafigura has secured a six-year allocation of export capacity on the Lobito Atlantic Railway, amounting to up to 450,000 tonnes annually starting in 2025. Kamoa-Kakula, a joint venture between the Canadian miner Ivanhoe and Chinese Zijin Mining, will transport a minimum 120,000 tonnes, and potentially as much as 240,000 tonnes, of copper products every year from 2025. It also has an initial agreement to transport 10000 tonnes in 2024 as operations on the railway scale up. 

The Lobito Corridor, which also extends to Zambia has been touted as a flagship African development project that would help reduce Chinese grip on the supply of critical minerals. Beijing controls most of the cobalt and copper production in DRC. Major Chinese mining firms also produce more than half of Zambian copper output. The Lobito corridor has been financed by a combination of the US government, the African Development Bank and Trafigura. Feasibility studies for an ambitious new greenfield rail line extension connecting Zambia and Angola are being conducted with the support of the US International Development Finance Corporation (DFC).

 

References

‘Concession for railway services transferred to Lobito Atlantic Railway in Angola’, Trafigura, 04 July 2023

‘Joint statement from the United States and the European Union on support for Angola, Zambia and the Democratic Republic of the Congo’s commitment to further develop the Lobito Corridor and the U.S.-EU launch of a greenfield rail line feasibility study’, The White House, 09 September 2023

‘Zambia, DRC and Angola eye new economic opportunities from Lobito corridor’, How we made it in Africa, 21 September 2023

‘Trafigura and Kamoa-Kakula sign agreements to become first customers of the Lobito Atlantic Railway’, Trafigura, 07 February 2024

‘DFC announces new U.S. financing for Africa’s Lobito Corridor’, U.S. International Development Finance Corporation, 08 February 2024

‘Lobito corridor: Hoping to break China's grip on African ore’, Deutsche Welle, 08 February 2024

‘Kamoa-Kakula Copper Complex’, Ivanhoe Mines, Accessed 20 February 2024