Volume growth came with one mine in front, cobalt stayed 31 per cent below its 2021 close, and reserves dipped.

By Kanisa Magazine · January 2023

Congo’s external account entered 2023 on the back of a record volume year. The Banque Centrale du Congo (BCC) reports provisional 2022 copper output of 2,359,824 tonnes, up 30.9 per cent on 2021, and cobalt of 111,309 tonnes, up 19.5 per cent. By 20 January, London copper stood at US$9,393 a tonne, 12.1 per cent above its level at the end of December.

Cobalt told a different story, and the dollars that arrive in the BCC’s accounts did not rise in line with the tonnage. The result is an external position that is strong on volume, uneven on price and dependent on a short list of mines.

The volume year

Copper rose by 557,000 tonnes in 2022, and one mine supplied roughly two-fifths of the increase.

The BCC’s cumulative table for the year shows copper at 2,359,824 tonnes against 1,802,897 in 2021, an increase of about 557,000 tonnes. Cobalt rose from 93,144 to 111,309 tonnes. Diamonds rose 45.7 per cent to 17.7 million carats, of which 10.5 million were artisanal. Gold fell 12.9 per cent to 27,798 kilograms, zinc fell 23 per cent, and crude oil was flat at 8.43 million barrels.

Ivanhoe Mines’s production release of 9 January credits Kamoa-Kakula with 333,497 tonnes of copper in concentrate for 2022, a 215 per cent jump that landed at the top of the 290,000 to 340,000 tonne guidance. Working back from that growth rate, the mine added roughly 228,000 tonnes, around two-fifths of the national increase, though the company and the BCC may measure tonnage differently.

Ownership shows in the same table. Gécamines, the state miner, reports 4,562 tonnes of copper of its own, under 0.2 per cent of the total, and 19,907 tonnes of cobalt, about 18 per cent. The rest is produced by partners and other operators, so the volume gains accrue first to private and joint-venture balance sheets and reach the state through royalties, taxes and the dollar repatriation rule.

The price year

On 20 January copper stood 3 per cent below its 2021 close, and cobalt 31 per cent below.

The BCC’s price table shows the divergence. Copper was US$9,710 at the end of 2021, US$8,379 on 30 December and US$9,393 on 20 January. London cobalt (99.3 per cent) was US$70,195 a tonne at the end of 2021, US$51,515 at the end of 2022 and US$48,575 on 20 January. Gold gained 5.8 per cent in the three weeks, to US$1,930 an ounce, and Brent crude was US$87.66.

The month-end series shows how 2022 unfolded. Copper stayed above US$9,500 from January to May, peaked at US$10,390 in March, then fell to US$7,660 by the end of September. Volume gains were therefore partly offset in the second half, and cobalt, with prices down by almost a third from the 2021 close, earned far less per tonne than its rising tonnage implies.

From tonnes to reserves

Export dollars reach the central bank through taxes and repatriation, with a lag, so reserves can fall in a strong month.

Mining volume does not turn into reserves automatically. Year-end reserves of US$4.3 billion, up 60 per cent over twelve months, owed part of their rise to IMF disbursements totalling US$406 million, according to Sika Finance. The BCC’s table puts the 30 December figure at US$4,382.9 million and the 20 January figure at US$4,176.6 million, a fall of about US$206 million, with import cover down from 2.63 to 2.26 months.

The fall coincided with the franc’s January weakness, but the table does not say why reserves moved. What it does show is that a record volume year did not insulate reserves from a three-week dip.

What the Kamoa-Kakula ramp-up means

A single mine’s debottlenecking will set the pace of Congolese copper volumes in 2023.

Ivanhoe guided to 390,000 to 430,000 tonnes in 2023, with the debottlenecking programme more than 90 per cent complete and cold commissioning targeted for April. The World Bank’s October outlook expects mining growth of 10.1 per cent in 2023, slowing to 9.0 per cent in 2024 when the Kamoa-Kakula expansion ends.

For suppliers and logistics firms the planning rule is to follow the commissioning calendar, not the price: trucking, power, spares and contract services demand tracks tonnes. Cobalt-exposed businesses should budget around US$48,000 a tonne and treat any rebound as upside, since the January trend was down.