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China consumes nearly 14 million tonnes of copper each year, more than the rest of the world combined. But domestic supply last year was only about 2 million tonnes, including scrap, and mined production has been stagnant for years.
Imported concentrate, from some 30 Chinese-owned mines in Africa and elsewhere, now supplies 40% of the country’s needs, a share that has more than doubled in the past decade while imports set new records every year.
In addition to foreign direct investment in mining projects around the world, China has spent more than $16 billion buying copper companies and assets abroad since 2010.
Examples include Glencore’s sale of Las Bambas in Peru to a Chinese consortium, China Moly’s 2016 acquisition of the Tenke Fungurume mine from Freeport for $2.65bn and Zijin Mining’s joint venture with Ivanhoe Mines on the Kamoa-Kakula mine, both in Congo.
However, China will have a lot of work to do if it is to follow the Japanese model in securing long-term supply to feed its downstream industry.
Japan has managed, through well-known companies such as Sumitomo, Marubeni and Mitsui, which have acquired minority stakes and JVs in dozens of projects, to own 70% of the copper concentrate it imports.
Although larger in absolute terms, with just under 1.2 million tonnes of metal concentrate, Chinese overseas companies supply only 20% of the country’s needs. Needs that have only grown significantly in recent years with the construction of refineries.
The vast reserves in the Central African copper belt remain attractive, likewise North America, and further afield Ecuador and Argentina could become the next copper frontiers.
China has enjoyed a fairly open field in Africa, its number one destination for copper and especially cobalt, but Congo is now suffering under some of these investments.
In the future, China may also have to compete with the likes of BHP, which recently said it might consider looking at once inaccessible areas such as Zambia or Congo after its foray into Ecuador.
