Major mining companies to reconsider Congo, Zambia risks as copper price surges

Major mining companies are seeking to reconsider investing in countries they previously considered too risky, including Democratic Republic of Congo and Zambia, propelled by a dwindling pipeline of big copper mines elsewhere and record-high prices.

Investor wariness about uncertain regulatory environments, challenging working conditions and corruption have meant some listed companies favoured countries such as Australia or Canada, despite the higher costs of operating there.

“I am confident we have the capabilities to pursue opportunities in what some would see as tougher jurisdictions, but the size of the opportunity needs to be commensurate with the increase in management effort that is going to be required,” said BHP CEO Mike Henry.


BHP, the world’s biggest miner, hasn’t been active in Africa since it span off South 32 in 2015. In Congo, the start up without hitches of big projects like Ivanhoe’s Kamoa-Kakula mine provides reassurance for companies considering a project in the country, investors say.

“Mining companies take a longer-term view than regimes last. What is perceived as risky today might not be so in 10 years. When BHP developed Escondida, Chile was considered riskier than it is now and look at the value of that project many years down the line. One of the advantages of diversified miners is their ability to manage risk rather than avoid risk,” said George Cheveley, portfolio manager at Ninety One in London.

“Going to places like Zambia has just become so much higher on anybody’s agenda,” said Nick Schirnding, chairman of exploration firm Arc Minerals, a company that owns five copper exploration licences in the country.

Investors have become more tolerant in general, and the African copperbelt’s high-grade copper is a reward for the higher risk, said Ian Woodley, a fund manager at Old Mutual.

“You can get 3% to 4% copper in the DRC and Zambia; you can’t get that anywhere else,” he said.

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