Ivanhoe comments on DRC export ban
Ivanhoe Mines Ltd. [IVN-TSX, IVPAF-OTC] on Friday issued a response to a media report which said that miners in the Democratic Republic of Congo (DRC) received an order on May 26, 2021, that has banned the export of copper and cobalt concentrate from that country.
Ivanhoe said it is aware of the order issued to customs officials by the provincial director of Customs and Excise in Katanga Province of DRC. Ivanhoe also said it is aware of a subsequent letter confirming that companies with a derogation letter from the Minister of Mines will be allowed to export concentrates.
In an investment report, Scotiabank said the concentrate export ban has been in place for several years and is not a new development. What has changed recently is that an industry-wide exception to the export ban due to a lack of smelting capacity and power availability officially expired in mid-April 2021, the report said.
As a result, each mining operation now has to apply to the DRC Minister of Mines on a case-by-case basis for an export ban exception (known as a derogation letter).
Ivanhoe is developing The Kamoa-Kakula Copper Project, which is expected to rank among the world’s largest copper mines, with peak annual production likely to exceed 700,000 tonnes.
Kamoa-Kakula is a joint venture between Ivanhoe Mines (39.6%), China’s Zijin Mining Group (39.6%), Crystal River Global Ltd. (0.8%), and the DRC government (20%).
Scotiabank said that because miners are not allowed to apply for the export permit until they are in production, Kamoa-Kakula does not currently have one in hand. The mine achieved first production earlier this week.
But given that the DRC government is a 20% shareholder in Kamoa-Kakula, Ivanhoe’s intends to build a future domestic smelter, and its ongoing support to refurbish domestic hydro-electric power, it is expected that Ivanhoe will receive its export permit in due course.
The DRC is expected to produce 2.0 million tonnes of copper in 2022, up from 1.7 million tonnes in 2021, material that represents 8.4% of global output.
On Friday, Ivanhoe shares eased 3.5% or 33 cents to $8.95 on volume of 2.6 million. The shares are currently trading in a 52-week range of $9.74 and $2.85.
“The concentrate ban is not new,” said Ivanhoe President and CFO Marna Cloete. “However, the rules now recognize that a derogation may be justified for a number of reasons,” she said. “Kamoa Copper has filed the necessary application materials and we have had constructive discussions with the Minister of Mines on obtaining a derogation for Kamoa-Kakula given current limitations on smelting capacity in the country.”