Copper tonnes are up, cobalt value is down by half, and reserves slipped US$414 million.

By Kanisa Magazine · October 2023

Congo is shipping more copper and earning less per tonne of cobalt, and the central bank’s October data shows which of the two is winning. Provisional BCC output for January to September is 2.11 million tonnes of copper, which annualises to about 2.8 million tonnes against 2.39 million in all of 2022. Cobalt, at 69,280 tonnes, annualises to roughly 92,000 tonnes against 115,000 last year.

The external account is where those two lines meet the dollar. At the same moment reserves stood at US$4.6 billion on 20 October, down from a peak of US$5.0 billion at the end of August. The fall is modest in size and sizeable in meaning, because it tells a business how much cushion the franc has left.

Price, volume, or both

On the BCC’s own numbers copper value is up roughly a tenth and cobalt value is down by about half.

Start with price. The LME copper quote was US$7,880 a tonne on 20 October, 6 per cent below its end-2022 level of US$8,379. Cobalt was US$32,990 a tonne on the LME against US$51,515 at the turn of the year, a fall of 36 per cent. Now add volume. Copper volume is running about 17 per cent ahead of 2022 on an annualised basis, so copper value is up roughly 10 per cent. Cobalt volume is running about 20 per cent behind, and with price down 36 per cent, cobalt value is about half last year’s. These are the writer’s estimates from the digest’s production and price tables, not BCC export statistics, and they ignore stocks and timing.

Where the copper is coming from

Two named producers show that the volume gain is real and concentrated.

Ivanhoe Mines said its Kamoa-Kakula complex produced a record 103,947 tonnes of copper in concentrate in the third quarter, taking the year to 301,336 tonnes against guidance of 390,000 to 430,000. Glencore’s third-quarter report put its Katanga and Mutanda operations at 68,900 tonnes of copper and 10,400 tonnes of cobalt for the quarter. A handful of operators is carrying the volume story, and their dollar receipts reach Kinshasa through royalties, taxes and the local spending of contractors, not as a general export windfall.

The leaks: imports and financing

Fuel and capital goods take a large share of the dollars before they reach reserves.

Brent closed at US$91.30 on 20 October, 6 per cent above its level at the end of last year, and Congo imports virtually all its refined fuel. Mining itself is import-hungry: trucks, reagents, power equipment and food for camps are bought in dollars. Reserves cover 2.48 months of imports on the BCC’s calculation, down from 2.71 months at the end of August. The central bank’s dollar position is therefore the residual after a very large import bill, and that residual shrank by roughly US$414 million in eight weeks.

The financing channel matters too. The BCC’s indicative rate moved from CDF 2,017 to CDF 2,522 per dollar since December, and the central bank has been defending reserves with a 25 per cent policy rate rather than with large dollar sales. That is cheaper than burning reserves, and it explains why the franc has slid in a controlled way rather than collapsing.

What this means for a supplier or an importer

Plan for a franc that keeps drifting while copper volumes stay strong.

For businesses that sell to the mines, the bigger risk is not the cobalt price but the timing of payment: contractors paid in dollars are insulated, those paid in francs or on long terms are not. For importers, the signal in this digest is that the cushion is thin, at under two and a half months, and that a fall in copper below US$7,500 or a rise in Brent above US$95 would narrow it faster than volumes can widen it.

A practical rule follows. Price import contracts in dollars, keep franc receivables short, and read the reserve line in each weekly digest as the early warning. As long as reserves hold above US$4.5 billion and copper volumes keep rising, the controlled drift is the likely path.