African copper, cobalt logistics chain under pressure as truckers avoid DRC

Producers are increasingly finding it hard to transport their copper and cobalt out of operation sites in the Democratic Republic of Congo (DRC), due to truckers choosing to stay away from the country's border

Since the start of this year, the DRC border has arguably become the costliest to cross in the African continent, with tariffs, wait times, and a lack of inbound cargo making the DRC an unpopular destination for truckers.

The latest catalyst intensifying the truck shortage is the additional copper output created since the 2021 commencement of the DRC’s Kamoa-Kakula project, a mega copper greenfield project with a production scale unseen for a decade.

Just last month, Kamoa-Kaula announced the start of its phase-two production – four months earlier than scheduled. This progress will enable Kamoa-Kakula, jointly operated by Ivanhoe and Zijin Mining, to achieve the upper end of its 2022 copper production guidance of between 290,000 and 340,000 tonnes.

A large portion of output, in the form of copper raw materials, must be transported by truck to destinations outside the DRC, which has limited primary smelting capacity.

More copper, fewer trucks

“Just like every producer, Kamoa-Kakula operator is eager to cash in on their copper products. They have big volumes and are offering a trucking fee 30 to 50 percent higher than market rate. Good luck for them,” one Africa-based copper miner said, citing a rise in offers from trucking firms.

Strong motivation for producers to cash in is understandable right now. One tonne of copper is now trading at $10,290, and one tonne of cobalt was around $82,000 on the London Metal Exchange on Thursday April 14. These prices represent a 16% and 65% increase, respectively, compared with one year ago.

To successfully deliver the materials every month or quarter, DRC metal producers must renegotiate freight terms with trucking service providers to transport output across the border to loading ports, namely Durban port in South Africa, Dar es Salaam in Tanzania, and Beira port in Mozambique.

These are all popular loading ports used by DRC metal sellers to ship their products – which include 70% of the world’s cobalt output and 8% of the world’s copper output – to customers in Asia and Europe.

“It [a 30-50% premium] is correct regarding what Kamoa-Kakula are offering for trucking, and yes, it’s moving up our cost for exports,” a copper trader sourcing from the DRC said.

“Kamoa-Kakula have to get many trucks to serve them at one time. Stockpiling pressure is growing, so they inevitably have to outbid other DRC copper producers in getting trucks,” a second DRC copper producer source said.

“I won’t say Kamoa’s move to win trucks over is the cause of this shortage. Yes, it drives the market up for all, but it doesn’t reduce trucks to DRC. There are plenty of structural issues,” the second source added.

Truckers say no to lengthy, costly DRC trip

“There’s now an epic shortage of DRC trucks to load materials out,” the trader source said. “Drivers across Africa are unwilling to go to DRC, as the process is too lengthy and there is a long queue.”

The duration of a round trip is a crucial part of the decision for a truck firm considering whether it is profitable to send a truck to the DRC. The revenue for 50 trucks round-tripping in 20 days is the same as 100 trucks in 40 days.

But the excessive number of days it takes for a truck to enter the DRC and return – due to congestion – means the math doesn’t work.

“For copper materials out of DRC’s Kolwezi in Lualaba to reach South Africa’s Durban port, it requires up to 35 to 40 days now, the starting point being arrival on site for loading,” the second mining company source said.

The traffic to Durban port could also be complicated by this week’s floods, which have caused partial closures of rail lines, warehouses and roads. Some metal deliveries are already contending with instances of force majeure, further stretching the delivery schedule.

On top of time costs, toll costs are also high for those taking strategic copper transport routes in and out of the DRC.

There are six toll booths charging tariffs for heavy-goods vehicles making round trips along the 400 kilometer Kolwezi-to-Kasumbalesa road, local media Rédaction Africanews reported.

“There are a lot of traffic jams, a lot of tolls, a lot of waiting at the border,” a Tanzanian trucker said. He was responsible for driving 27 tons of copper cathodes out of the DRC to the Dar es Salaam port for loading at the time of an interview in early March.

Road traffic has since then become even more congested, with a rail bridge to Dar es Salaam closing down in the past few weeks.

“A lack of trucks in the DRC due to congestion is not exactly an issue money can fix,” the trucker source said. “No amount of money can get your truck through Kasumbalesa quicker.”

One option is for producers to set up in-house trucking companies.

“It may take a longer time, but we could at least secure our own trucks,” the first mining company source said.

Want to read more about the risks impacting the supply chains of battery raw materials, including copper and cobalt? Take a look at our recent BRM risk matrix: Ten factors that could put the brakes on electric vehicle growth.

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