Ivanhoe signs up to be US-backed African rail line’s first user

Ivanhoe Mines Ltd., chaired by billionaire Robert Friedland, and commodities trader Trafigura Group signed deals to transport copper by rail from the Democratic Republic of Congo to neighboring Angola’s port of Lobito, marking the first long-term deal for the railway project that the US government is backing.

Trafigura is part of the consortium that won a 30-year concession to operate the Lobito railroad that could become a key export route for DRC’s fast-growing production of copper and cobalt — both crucial metals for the energy transition. Ivanhoe says the route could drastically cut transport times and lower emissions.

“This is fantastic news for the Congo,” Friedland said in a speech in Cape Town Wednesday. “This brings the mineral rich region of the Congo to world markets. And this kind of infrastructure development is critical for the development of the African continent.”

Mining companies operating in the copper belt that straddles Congo and Zambia have traditionally trucked their metals down to South Africa’s Durban port. This journey can take more than a month. Lobito promises to cut trip times to less than a week, to an Atlantic port that’s closer to the US and European Union. Both powers are backing the project financially, as part of their efforts to counter China’s heavy influence in the region.

The US has committed $250 million to the refurbishment of the line in Angola, and is funding a study to link the railway into Zambia as part of a project that will cost an estimated $1.6 billion. That’s part of an acceleration of US investment in Africa, said Amos Hochstein, senior adviser to US President Joe Biden for energy and investment. It’s also catalyzing private investment, he said.

Infrastructure is emerging as a key investment area for funds including BlackRock Inc., led by Larry Fink.

“We’ve seen a transformation from the financial industry worldwide but especially in the US from some skepticism to a realization that this is the new frontier of investment to enable the kind of supply chains that we are going to need,” Hochstein said in an interview Tuesday. “There’s interest in real investment, and translated from not just Larry Fink talking about it but we’re seeing money being put to action, money being raised for the purpose of infrastructure in low and middle income countries.”  

The Lobito Atlantic Railway concessionaires, which also include Mota-Engil and Vecturis, will ramp up the line’s export capacity to one million tons yearly by the end of the decade, Trafigura said in a statement Wednesday. Trafigura’s export capacity allocation on the line will be 450,000 tons from 2025. 

Ivanhoe’s massive Kamoa-Kakula copper mine, jointly owned with Zijin Mining, has agreed an allocation of between 120,000 tons and 240,000 tons.

This article originally appeared on Bloomberg