International interest in African copper is on the rise, particularly in South Africa, Zambia, and the Congo, despite a rise in the price of copper and increased scrutiny of mining activities from African governments.
The race for natural resources in Africa includes copper, and South Africa, Zambia, and the Congo are particularly rich in the red metal. The continued rise in the price of copper, coupled with tighter supply worldwide, has intensified the desire of both large and small miners to increase their investment across Africa. At the same time, governments across the continent are demanding greater shares in profits from the country's natural wealth, and the rights of mine workers are coming under closer scrutiny. With interest in copper mines across Africa expected to continue increasing, legislators and corporate executives alike will be closely monitoring how local governments balance their economic needs with social and environmental concerns. Investors should be increasingly wary of changes in mining tax policies, as the possibility of labor unrest affecting output may increase. Shift from South Africa to the Congo South Africa is one of the continent's biggest copper producers, with the Palabora mine producing about 75 percent of the country's total red metal output. The financial future of the mine, however, is hazy as its two largest multinational shareholders announced last September that they plan to sell their respective stakes amid increasing political risks in the country. Rio Tinto (ASX: RIO) currently holds a 57.7 percent stake in Palabora Mining Company Ltd. (OTC Pink: PBOAF), while Anglo American (LSE: AAL) holds a 16.8 percent interest. Both companies stated that they are looking to invest in larger, longer-life assets, even as Palabora accounted for eight percent of Rio Tinto's mined copper production in the first half of 2011. Mining giants in other commodities have also been retreating from South Africa in recent months as the ruling national party mulls the possibility of nationalizing mineral assets. The Congo, meanwhile, is attracting more investors after years of civil unrest, including mining entrepreneur Robert Friedland. The Executive Chairman of privately-held Ivanplats, and CEO of Ivanhoe Mines (NYSE: IVN), said in early February that Ivanplats will be developing the Kamoa mine, Africa's largest copper project in the country. Friedland commented that the mine will have a lifespan that can be “measured in generations as opposed to decades.” China's growing dominance The Congo is also attracting the attention of Chinese investors, including Minmetals Resources (HKG: 1208), which completed its $1.3 billion bid for Toronto's Anvil Mining (TSX: AVM) in February. Anvil is heavily invested in the Congo, most notably in the Kinsevere copper mine in the Katanga province. Minmetals is a subsidiary of the Chinese state-owned Minmetals Group, and is the latest among publicly-owned Chinese companies to secure mining deals in Africa as the country looks to secure access to natural resources. Last November, China's Jinchuan Group successfully bid for copper and cobalt producer Metorex with the blessing of the governments of South Africa and Zambia, having beaten out Brazil's Vale (NYSE: VALE). China's thirst for mineral resources is viewed by some industry analysts as an opportunity for junior miners to expand in order to meet growing international demand for copper mines.