Power Infrastructure Investment in Mining
Long-term power infrastructure investment and strategic partnerships to unlock large-scale copper production
Context
As the global economy shifts toward decarbonization and digitalization, demand for critical minerals, such as copper, cobalt, and lithium, has surged dramatically. These resources are essential to renewable energy systems, electric vehicles, and advanced electronics. Unlocking this potential, however, often depends on addressing significant infrastructure and investment barriers.
One example is the case of Ivanhoe Mines in the Democratic Republic of Congo, where public–private collaboration and cross-border energy integration helped address power shortages, stabilize operations, and enable world-class copper developments such as the Kamoa-Kakula Copper Complex.
Challenge
The Kamoa-Kakula project faced multiple challenges:
- Power Shortages: The national grid couldn’t reliably meet industrial demand, forcing reliance on costly diesel generators[i].
- High Energy Costs: Diesel power was up to four times more expensive than grid electricity.[ii]
- Transport Bottlenecks: Over 150 truckloads moved daily to distant ports, with logistics accounting for more than 30% of total cash costs.[iii]
- Regulatory Uncertainty: Mining code reforms in 2018 removed key investor protections, raising perceived risk.[iv]
- Limited Infrastructure for Small Operators: Smaller miners lacked the capital to fund energy and logistics solutions, limiting sector-wide growth.[v]
Approach
To address these constraints, Ivanhoe Mines pursued a multi-layered strategy
- Hydropower rehabilitation: In partnership with the state-owned Société Nationale d'Électricité (SNEL), Ivanhoe rehabilitated the Mwadingusha hydroelectric plant, restoring 78 MW of clean power for Kamoa-Kakula.[vi]
- Cross-border electricity imports: The company imported additional hydroelectric power via the Zambian interconnector, sourcing supply from Mozambique to stabilize operations.[vii][viii]
- Backup power: On-site diesel generation provided supplementary supply during grid instability or maintenance, ensuring uninterrupted operations.[ix]
Conditions
Several conditions supported the project:
- Equity-Funded Risk Tolerance: Early-stage investments were financed through equity despite high country risk.[x][xi]
- Public-Private Collaboration: Partnership with SNEL aligned the project with national energy priorities and expedited regulatory approvals.[xii][xiii]
Observed Impact
The energy strategy has delivered significant outcomes:
- Record production: Output levels significantly exceeded initial guidance, highlighting the mine’s ability to ramp up operations faster than expected.[xiv][xv]
- Improved power supply: Additional hydropower imports expanded capacity and enhanced operational stability. [xvi]
- Operational efficiency: Greater power availability enabled downstream processing capacity, reducing transport costs by more than 50%.[xvii]
- Environmental performance: Reliance on renewable hydropower positioned the operation among the lowest GHG-emitting major copper mines. [xviii]
- Renewable expansion: A new solar power agreement, combined with battery storage, is expected to provide continuous green power and cut emissions by 77,750 tonnes annually. [xix]
What’s Next for the Southern African Region
The Ivanhoe Mines case study offers valuable lessons for other Southern African countries aiming to unlock their mineral wealth while addressing infrastructure and investment challenges. Key takeaways for consideration could include:
- Leverage public-private partnerships (PPPs): Similar models can help rehabilitate aging energy infrastructure in Zambia, Mozambique, and Zimbabwe.
- Strengthen regional integration: Expanding cross-border electricity trade and developing regional corridors like the Southern African Power Pool and Lobito Corridor can reduce costs and improve export competitiveness.
- Align policy with ESG goals: Stability clauses, transparent permitting, and renewable-powered mining can help attract climate-aligned capital and lower investment risk.
[iii] https://www.ivanhoemines.com/wp-content/uploads/20230816_lobito_corridor_trial_shipments_vf.pdf
[iv] : https://www.state.gov/reports/2018-investment-climate-statements/congo-democratic-republic-of-the
[v] https://www.africafc.org/news-and-insights/news/AFC-invests-in-Africas-largest-copper-complex
[vi] https://www.andritz.com/hydro-en/hydronews/hn35/mwandingusha-dr-congo
[ix] https://www.mining.com/press-release?id=67c8674f3b97134ab6a02a95
[x] https://www.ivanhoemines.com/wp-content/uploads/2025-01-08-IVN-Investor-Presentation_c-002.pdf
[xiv] https://www.mining.com/ivanhoe-shares-rise-on-hydropower-boost-q1-production-results/
[xvii] https://www.ivanhoemines.com/what-we-do/operations-projects/kamoa-kakula-mining-complex/
[xviii] https://www.ivanhoemines.com/what-we-do/operations-projects/kamoa-kakula-mining-complex/