Copper, cobalt and more from the DRC: the DRC is a landmass the size of Western Europe with one of the world's largest copper deposits. There is political risk aplenty but there is also promise of change, writes Priscilla Ross.(Construction)

LUNDIN MINING AND Tenke Mining are to merge. Lundin Mining, a European copper and zinc producer has agreed to purchase Canadian Tenke Mining Corp for about C$1.54bn (U$1.34bn) to gain cobalt, copper and gold operations in Africa and South America.

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The Tenke Fungurume copper/cobalt deposit located in Katanga province, Democratic Republic of Congo (DRC), which is one of the world's largest undeveloped copper deposits has site infrastructure and process facility layouts designed for significant expansion. Tenke's has a 24.75 per cent interest in the Tenke Fungurume copper/cobalt deposits. Their operating partner is the major Freeport-McMoran Copper & Gold (formerly Phelps Dodge) which holds 57.75 per cent of the equity and La Generate des Carriers et des Mines, the DRC state mining company holds the rest of the 17.5 per cent equity.

A 40-year mine plan has been developed and construction of the project is in progress. During the first 10 years an open pit surface mining operation will be developed. The copper grade is high at 4.57 per cent and the capital cost for the initial production facilities is estimated at U$650mn.

First production

First copper production is expected in late 2008/early 2009. The mine is expected to be in the lowest quartile of unit operating costs for world copper producers. Achieving strong project economics in a base study at a robust U$1.05/lb copper long term and a U$8.00-US$12.00/lb range for cobalt depending on the year under consideration. At the time of writing the copper price was around U$3.60/lb. A feasibility study has calculated that the mine will have the capacity to produce 115,000 tonnes/year of copper and 8,000 tonnes/year of cobalt.

Life of mine cash operating costs are estimated as negative (U$0.19)/lb of copper produced, including a U$10.00/lb cobalt credit. The average copper price for 2007 is predicted at US$2.70/lb and for 2008 some U$2.35/lb. Production disruptions will also cause the price to temporarily spike northbound.