CITIC Securities: The export ban in the Democratic Republic of the Congo may drive up copper prices, and the copper sector is expected to welcome a resonance of valuation and performance

According to the Zhitong Finance APP, CITIC Securities released a research report stating that the news of the export ban on copper concentrate from the Democratic Republic of the Congo may further stimulate bullish sentiment in the copper market, pushing copper prices to accelerate above USD 15,000 per ton. Under the influence of factors such as the cooling expectations for Federal Reserve interest rate hikes, frequent disturbances at the mining end, and the continuous siphoning of global copper inventories by the United States, the bank expects the copper sector to experience a resonance rise in valuation and performance, recommending copper companies with high-quality copper mine assets and clear production growth paths.

The main points of CITIC Securities are as follows:

Event:

According to a Reuters report on August 6, the latest government order indicates that the Democratic Republic of the Congo has banned the export of copper and cobalt concentrates (hereinafter referred to as the "ban"). This order, signed on June 29, was jointly signed by the Minister of Mines, the Minister of Foreign Trade, and the Minister of National Economy of the Democratic Republic of the Congo. The order explicitly prohibits the export of copper and cobalt concentrates and introduces a new tax system for mining by-products of significant economic value. The export ban takes immediate effect, while the new by-product tax system has a three-month transition period. The order states that in "strategic" circumstances, the Minister of Mines can approve a one-year export exemption.

The ban has limited impact on global copper supply and the operations of Chinese enterprises.

According to data from the Ministry of Mines of the Democratic Republic of the Congo, the country is expected to produce 3.485 million tons of copper by 2025, including 2.848 million tons of cathode copper, 471,000 tons of copper concentrate, and 371,000 tons of copper concentrate for export. Kamoa-Kakula, as the largest copper concentrate production project in the region, is expected to have its 500,000 tons/year supporting smelting plant operational by the end of 2025. According to a statement from Ivanhoe Mines, all Kamoa copper concentrates will be processed at its own smelting plant or local smelters in the first quarter of 2026. Data from the Ministry of Mines of the Democratic Republic of the Congo shows that its copper concentrate exports in the first quarter of 2026 are only 18,900 tons, a year-on-year decrease of 82.3%, accounting for about 0.3% of global copper production. According to announcements from various enterprises, Chinese enterprises in the Democratic Republic of the Congo mainly have hydrometallurgical copper projects (producing cathode copper), and some pyrometallurgical projects producing copper concentrates will also locally smelt into anode copper and other products not affected by the ban. Coupled with the export exemption policy, the bank judges that the ban will have a limited impact on the production and operations of Chinese copper enterprises in the Democratic Republic of the Congo.

The ban may further boost market sentiment and drive copper prices to new highs.

Although the bank expects the ban to have a limited impact on global copper supply, the current copper market is at a critical juncture with frequent supply disturbances and continuously declining local inventories. This ban may exacerbate market concerns about supply tightness, and the signals of resource nationalism conveyed by the ban, such as strengthening raw material control and seeking to extend the industrial chain, will also bring uncertainty to long-term copper supply growth. As of August 5, 2026, the LME copper price closed at USD 14,150 per ton, and the bank expects this sentiment to drive LME copper prices to accelerate above USD 15,000 per ton.

The copper sector is expected to experience a resonance rise in performance and valuation.

As of August 6, the forecast PE for CITIC's copper sector for 2026/2027 is 12.3/10.5 times (according to Wind consensus expectations), still at historical lows. With the cooling expectations for Federal Reserve interest rate hikes, the macro pressure on copper sector allocations is alleviating, and the valuations of copper industry companies that have been under pressure in the first half of the year are expected to recover At the same time, the recent continuous rise in copper prices has also driven the upward revision of performance expectations for related companies. Companies in the copper industry are expected to experience a resonance of performance and valuation, driving the sector's rise.

Risk Factors:

The enforcement of the copper concentrate export ban in the Democratic Republic of the Congo is weaker than expected; the timing, method, or extent of the increase in U.S. copper tariffs is less than expected; high copper prices lead to downstream demand being lower than expected; risks of liquidity shocks caused by the escalation of the U.S.-Iran conflict