Commodity trading Trafigura and Ivanhoe Mines announced on Wednesday a six-year reserved capacity agreement to transport copper products via the Lobito Atlantic Railway.

The agreement marks the launch of a new import-export trade route between the African Copperbelt and Angola’s Atlantic coast, Trafigura says in a statement sent to Kallanish.

It will enable copper from the Kamoa-Kakula complex in the Democratic Republic of the Congo to shipped to global markets in about half the distance than existing methods – via ports in South Africa, Tanzania, Mozambique and Namibia, according to Ivanhoe Mines.

Kamoa-Kalula is a joint venture between Canada’s Ivanhoe Mines and China’s Zijin Mining.

The undisclosed term sheet covers the right to transport a minimum of 120,000 tonnes and a maximum of 240,000 t per year of blister-anode or concentrate from the Kamoa-Kalula complex. It outlines a minimum term of five years starting in 2025, following a ramp-up year in 2024.

“The costs of exporting mineral products along the Lobito Corridor are expected to be cheaper than the current market price for trucking via the existing export routes, and the rates are anticipated to reduce further as volumes transported along the line increase,” Ivanhoe says in a separate statement.

The JV started trial shipments via the new railway in December 2023, and it expects to transport up to 10,000 t along the infrastructure this year.

The Lobito Corridor consortium, which comprises Trafigura, Mota-Engil and Vectures, was awarded a 30-year concession for the operation, management and maintenance of the railway in 2022. The concession also covers the Lobito Minerals port.

“We are pleased to be one of the first commercial customers to agree terms for a long-term commitment to use the Lobito Atlantic Railway and we look forward to welcoming other customers to join Ivanhoe Mines and Trafigura in the coming months,” comments Trafigura chairman and ceo Jeremy Weir.

The consortium will invest $455m in Angola and up to a further $100m in the DRC to improve the corridor’s rail infrastructure, capacity and safety, including rolling stock consisting of over 1,500 wagons and 35 locomotives. According to Trafigura, The US International Development Finance Corporation could provide at least $250m in financing to the project, which has also received support pledges from the EU.

“We admire the hard work of the Lobito Corridor consortium and Trafigura, working with their partners in the Democratic Republic of the Congo and Angola, to build a new supply chain that is fast becoming one of the most important trade routes for vital copper metal in the world,” adds Ivanhoe Mines’ co-chairman, Robert Friedland. “The transformative economic corridor will unlock more copper projects due to the lower logistical costs.”

Friedland believes cheaper logistics will increase the amount of economically recoverable copper across the Copperbelt, as cut-off grades can be lowered. This will ultimately have a “significant impact” on discoveries made in the DRC, he suggests.

Glencore, the largest cobalt producer in the DRC, is yet to disclose whether it plans to use the upgraded railway corridor.