Ivanhoe Mines (TSX: IVN), the operator of the world’s largest new copper mine in the Democratic Republic of Congo, has cut its copper production target due to soaring costs and operational disruptions. The company lowered its forecast for next year from 380,000 to 420,000 tonnes to 300,000 to 350,000 tonnes, a reduction of approximately 75,000 tonnes based on the midpoint of the previous target of 400,000 tonnes.
The Canadian mining company also raised its production cost estimate for next year from $2.10 to $2.50 per pound to $2.50 to $3.00 per pound. Rising diesel prices, lower ore grades, and decreased production volumes were cited as the main reasons for the cost increase. Short-term outlook adjustments are a reflection of our commitment to principles during the normalization process of the Kamoa-Kakula mine,
said Robert Friedland, Ivanhoe’s founder and chairman, emphasizing that the company prioritizes restoring annual production to the 500,000-tonne level
by enhancing operational stability and mining flexibility.
Switching to Open-Pit Mining
In response to the challenges, Ivanhoe has decided to introduce open-pit mining in addition to underground mining and has lowered the annual maximum production target for its existing concentrator facilities to 400,000 to 450,000 tonnes. The company plans to begin stripping the initial mining area’s topsoil in the first quarter of next year, with the first ore from this area scheduled to be extracted in the third quarter. However, the restart of underground mining in the Kakula East zone has been postponed from the end of next year to March 2028 due to additional geological and engineering work.
Capital Expenditure Revised
Ivanhoe has reduced its capital expenditure ceiling for this year by $200 million, carrying the remaining amount into next year. The company’s capital budget for next year, excluding pre-stripping costs for open-pit mining, is set at $950 million to $1.15 billion.
Industry Context
A Canadian mineral industry publication, Mining.com, commented that the series of disruptions at major mines shows that the industry’s aggressive plans to rapidly increase supply have run into a wall of reality.
The publication also noted that despite falling copper prices and increased uncertainty, companies continue to invest to secure future supply sources.
