Copper held near US$8,500, cobalt kept falling, and IMF money was approved on top.

By Kanisa Magazine · June 2023

Congo’s reserves stood at US$4,357.4 million on 23 June, 2.35 months of imports, higher than any month-end reading of 2023, according to the BCC’s digest of 28 June. They were US$4,166.7 million on 31 May. The mining sector that supplies most of the dollars looked very different on the price board: cobalt had lost close to half its January value, while copper had barely moved.

The external account has three parts to read apart: what prices do, what volumes do, and what financing adds. June gave a distinct signal on each.

Prices: copper steady, cobalt in free fall

London cobalt cathode sat at US$28,839 a tonne, 48.5 per cent below January.

Cathode cobalt in London was quoted at US$28,839 a tonne from 13 June, against US$56,026 on 31 January. The LME quotation was US$29,100 on 23 June, against US$51,515, a fall of 43.5 per cent. Copper dipped to US$8,016 on 5 June, 6.7 per cent below its 31 May level of US$8,590, then recovered to US$8,489 on 23 June, still 1.3 per cent above its end-January price. Brent crude stood at US$72.92 on 31 May against US$84.14 at the end of March.

Volumes: cobalt tonnes fell, copper tonnes edged up

First-quarter data show cobalt down 30 per cent and copper up 3 per cent.

The digest’s cumulative figures to March show copper output of 564,772 tonnes, up 3.2 per cent from 547,070 tonnes a year earlier. Cobalt output was 21,170 tonnes, down 30.1 per cent from 30,272 tonnes. Zinc rose 31 per cent, from 2,765 to 3,626 tonnes. The digest gives no reasons for the cobalt decline, and its first-quarter figures are provisional. The combination matters for the external account: copper tonnes up on a flat price add receipts, while cobalt tonnes down on a falling price subtract twice.

What cover means in dollars

Import cover of 2.35 months implies about US$1.85 billion of imports a month, and the state adds its own dollar deficit.

Dividing the US$4,357.4 million reserve stock by the digest’s 2.35 months gives an implied import bill of roughly US$1.85 billion a month. Reserves have risen US$290 million, or 7.1 per cent, since the 31 March low of US$4,067.4 million, when cover was 2.20 months. The IMF drawing would add about 0.11 months, taking cover to roughly 2.46 months on the same import figure. Those are small increments against a bill that large, which is why the price of cobalt matters even though copper carries most of the weight.

The state’s own dollar account draws on the same stock.

The BCC’s weekly note for 26 May to 2 June, reported by ACP, put May foreign-currency budget revenue at US$144.11 million and spending at US$177.09 million, a deficit of US$32.98 million. The same note put reserves at US$4.1 billion on 2 June, equal to 2.25 months of imports. A state that spends more dollars than it collects draws on the same reserves that import cover depends on.

Financing: US$203 million on top

The IMF Board approved US$203.3 million, about 4.7 per cent of the reserve stock.

On 28 June the IMF Executive Board concluded the fourth review of the Extended Credit Facility, releasing SDR152.3 million, about US$203.3 million, for balance-of-payments support, and taking total disbursement under the arrangement to about US$1,017 million. The Fund’s release noted that the money would go towards international reserves. It adds about 4.7 per cent to the stock the BCC counted on 23 June. It is a cushion, not a substitute for export earnings.

What the account says for business

The cushion is adequate for imports but thin against a cobalt price that is still falling.

Mining suppliers have an extra reason to watch the line. A dollar cushion of this size is what lets the central bank keep selling currency to the market when the franc is under pressure, and every weak week in cobalt reduces the room. Equipment importers and consumer-goods distributors can plan on dollar availability for the next quarter, since 2.35 months of cover plus the IMF drawing is more than they had in March. Exporters should model cobalt below US$30,000 a tonne, and lenders to Katanga producers should test cash flow on that basis. The signal to watch in July is whether copper holds above US$8,000 a tonne, because copper is now doing the work that cobalt used to.