Investors Jockey for Africa’s Largest Copper Region

Investors are rushing back to Africa as the global energy transition continues to take root. The increasing awareness that cobalt and copper are crucial to the global shift toward renewable energy and the risk to secure supply is also driving this move, given that the international copper market is already tight and it’s becoming increasingly difficult to locate new mines.

This area located in Africa between the borders of the Democratic Republic of Congo and Zambia contains one of the richest reserves of minerals in the world, including cobalt for rechargeable batteries and copper for cables and wire. This is the area at the center of this rush by multinational mining companies.

BHP Group, a major mining company, is looking to invest in the area, with Anglo American Plc also announcing that it had entered into a new joint venture last week. BHP recently held talks concerning the purchase of a copper project in Congo owned by Robert Friedland; the project is located near the Kamoa-Kakula mine. This purchase would make BHP the third largest producer of copper by 2024.

Additionally, Barrick Gold, which has criticized the Congolese government publicly, is looking for new projects in both Congo and Zambia while Quantum Minerals Ltd recently approvedan expansion in Zambia.

These announcements make come as a surprise to some, especially since western mining companies have been trying to leave rather than stay in this central African copper belt for years. The shift may have been brought about by Zambian President Hakainde Hichilema’s objective to triple the output of copper from the country in the next 10 years. The Zambian president hopes to woo investors into the country in order to meet this goal.

Chile and Peru, which are both very rich in copper, are also losing investors in the industry who view them as less friendly places to set up shop.

While Australia, European and American mining firms stayed away from the copper belt these past couple of years, Chinese companies invested in the region. The country’s influence is apparent, with the existence of the Congo city of Kolwezi rooted in the exploitation of the mines.

In order to achieve its production targets, Zambia needs to attract about $180 million annually in investments. The country is currently focused on making the environment attractive for global investors in an effort to benefit from the increasing demand for electrification around the globe, in much the same way that oil-rich countries capitalized on the energy boom.

The revived interest in the copper deposits found in some of the regions previously regarded as less desirable shows that major segment players such as Freeport-McMoRan Inc. (NYSE: FCX) could be poised to grow even bigger as their dominance grows as they benefit from this bull market.

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