Copper mines, both existing and projects under construction, are estimated to meet only 80% of global copper demand by 2030. Copper concentrates are already in deficit.

One of the most ambitious projects to supply this anticipated demand is the Lobito corridor in central Africa — 2,600km of railway linking copper mines in Democratic Republic of Congo (DRC) and Zambia to Angola’s Lobito port on the Atlantic coast. The estimated cost: US$2.3 billion.

So, will this train ever leave the station?

Global copper deficit crisis

First of all, why the urgency?

By 2035, the copper supply shortfall could be as much as 9.9MMt, 20% less than what is needed to meet global 2050 net-zero goals. To put this figure in context, the biggest shortfall between 1994-2020 was 2.5%.

The primary reasons for the problems in supply include:

• production in Chile, the world’s largest copper producer, has fallen steadily for more than six years to its lowest levels in decades, due to operational and investment challenges 
• in Peru, the world’s second largest copper producer last year, protests by local communities shutdown output
• declining copper ore grades across the world 
• new copper mines can take nearly 17 years to develop

But the big reason for the potential crisis is the expected surge in demand, especially from the energy transition. For example:

• an electric car needs x4 the amount of copper than a combustion engine
• 427MT of copper will be needed by 2050 to develop electric grids across the world to meet net-zero targets — more than 8x as much as wind turbines, solar panels and energy storage combined

“The overarching reality is that we’ve lost a million tonnes of supply to mine disruptions and the industrial cycle has turned a corner. The long-term energy transition demand story against a backdrop of underinvestment in new mine supply remains intact”

— Piotr Ortonowski, analyst at Benchmark Mineral Intelligence, told Reuters

S&P Global suggests all future demand could “theoretically” be met if three tier-one copper mines were fast-tracked, each with a capacity to produce 300,000 metric tons a year, every year per year for the next 29 years. The estimated cost for this would be more than US$500 billion. However, this would be unprecedented in history.

Africa’s copper belt

So, does the copper belt in central Africa have enough copper?

The copper belt in central Africa — about 450km long and 260km wide — runs from Luanshya, Zambia into the Katanga region of DRC. It is estimated to contain more than one tenth of the world’s copper deposits.

The Democratic Republic of Congo, estimated to have the seventh largest reserves of copper, overtook Peru to become the world’s second largest producer of copper in 2023. 

65% of new global copper reserves found in 2023 were in the DRC.

And Zambia (the ninth largest copper producer in the world and second largest producer in Africa after DRC), found “one of the world’s biggest high-grade large copper mines” earlier this year, according to KoBold Metals, a metals exploration company, who discovered the deposit and is backed by Bill Gates and Sam Altman.

Production in Zambia fell to 698,000 tons in 2023, from 763,000 tons in 2022, but with new mining investment, the country hopes to increase output to 1 million tons by 2026 and 3 million tons by 2031.

“It’s a project that’s about — far from just laying tracks. It’s about creating jobs, increasing trade, strengthening supply chains, boosting connectivity … for people across multiple countries. This is a game-changing regional investment”

— US President Joe Biden, at Meeting for Partnership for Global Infrastructure and Investment

And it’s not just copper. The mineral wealth along the Lobito Corridor is staggering, including oil and 26 of 51 listed critical minerals in Angola; cobalt, tin, tantalum, tungsten and gold in DRC; lithium, nickel, bauxite and manganese in Zambia — and many more.

All of it freighted in one of the most efficient ways possible in the region, significantly reducing logistics and costs. 

For example, in 2023, Ivanhoe Mines sent a trial run of 100,000 tonnes of copper concentrate along the new railway from DRC through Angola, along the Lobito corridor. It took 8 days for the first shipment of 1,100 tonne concentrate to reach the port of Lobito, compared with approximately 25 days by road to Durban, South Africa.

Current logistics through traditional routes, such as trucks to Durban, account for approximately 30% of total cash costs from Kamoa-Kakula copper complex, due to the long in-land distances travelled by road for exports to reach port.

Challenges

China

In 2022, a Western-led consortium beat Chinese firms to the contract to rebuild the Lobito railway — seen as one of the most ambitious moves by the West to challenge China’s dominance of the mining and minerals sector across much of Africa.

The finance to build the Lobito Corridor is from the US, EU, the African Development Bank, and commodities trader Trafigura, as well as Angola, Zambia and DRC.

But, China’s on-ground advantage is already decades ahead:

• Chinese firms own 15 out of the 19 major mines in the DRC, and the remaining four often sell their raw material to China (as of 2020)
• China has signed an MoU to rebuild the 1,860km Tanzania-Zambia Railway Authority (TAZARA) railway, reportedly prepared to spend more than US$1billion on the project (not an insignificant threat, given China’s long experience of building train projects on the continent)
• China’s foreign direct investment (FDI) increased from US$75 million in 2003 to US$5 billion in 2021, then “dropped” to US$1.8 billion in 2022, giving China significant influence over supply chains

China’s success increasingly raises the costs and liability for any Western investment.

And, as we highlight in our analysis “Refining is the chokepoint“, it’s not just about digging the ore out of the ground and transporting it as fast as possible to Western ports — but how you then refine the minerals — and China accounts for approximately 85% of global critical mineral processing capacity.

The US and EU have signed MoUs with DRC and Zambia to build critical mineral refining capacity in the region and there are efforts, for example, by Eurasian Resources Group (ERG) to supply refiners in Canada and Japan.

Geopolitical risk

One of the major challenges to the project is political risk — and not just in Africa.

In the DRC, Félix Tshisekedi was sworn in for a second five-year term as president at the start of 2024 after relatively peaceful elections — but his main rival’s power base is the mineral-rich Katanga province with regular clashes in the region.

Angola also has the potential for political disruption.

But, also in the West, political disruption with the US presidential election or elections across Europe, throw long-term policy directions in doubt.

The Lobito Corridor is a long-term project — but does the region, along with its Western partners have the long-term commitment necessary?

Africa gains

There is increasing evidence that many countries across Africa would welcome more investment from the West, to balance the continent’s dependence on China.

For example, 

• new critical mineral agreements have been signed by Japan and the UK with the region
• Africa is the US International Development Finance Corporation (DFC) largest regional portfolio with over $11 billion in financing for projects across the continent
• the EU is in negotiations with DRC and other African countries to secure critical mineral supply

Forecasts suggest revenues for copper, cobalt, manganese, nickel, graphite and lithium could more than double by the end of the decade. Africa accounts for over 40% of global reserves of cobalt, manganese and platinum – key minerals for batteries and hydrogen technologies.

“Africa’s vast resources of minerals that are critical for multiple clean energy technologies are set to create new export markets, but need to be managed well”

— IEA, Africa Energy Outlook report

Conclusion

There are two main objectives to the Lobito Corridor:

• reduce logistics and cost to transport copper to the West
• secure copper supply, especially from China

Getting a railway built through three countries in central Africa to the environmental social and governance standards of the West, may sound like the hard part, but we believe it can — and will — be done as long as the political will holds in the West.

There will be inevitable delays and cost over-runs, but the agreements have been signed, money is on the table, and the trial run has been successful. Economic momentum will now help drive improvements of transportation of minerals in the region to the West.

The challenge is securing copper supply.

At the moment, the majority of the mines and ore is owned by Chinese companies, and a new mine in Zambia can take up to 24 years, the longest development time in the world. Even if new mines are built, it could take at least a decade, probably more, to bring them online.

Without any new mines, supply will remain concentrated in the hands of Chinese companies who will prioritize China’s demands over the West, especially as global copper supply continues to tighten.

So, yes, the “Copper Express” will leave the station, but how much copper will it be carrying?