Mineral-rich DR Congo sparks power investment boom

From the newsletter

Cross-border electricity trading is shaping up as a major revenue source for African power utilities. Investment trends confirm growing activity. The DR Congo, with its minerals and hydropower, is drawing new investments for power line development. New York-based energy investor HYDRO-LINK plans to build a $1.5 billion Angola-DR Congo interconnector.

• Many African countries have sufficient resources for power generation, yet only a few currently have surplus electricity. To meet growing demand, countries are building power lines with their neighbours that have excess capacity to address their deficits. 

• The DR Congo has vast mineral resources and significant hydropower potential. But inadequate power generation has crippled the growth of this vital mining sector. The new Angola-DR Congo interconnector aims to fix this.

More details

• The deal for the power line construction comes just a few days after DR Congo signed a peace deal with Rwanda, which opened up investments in the Ruzizi III hydropower plant by Anzana Electric. This particular power deal involves the construction of a 1,150 km transmission line from Angola to DR Congo. HYDRO-LINK will partner with the Swiss-based Mitrelli Group on this project.

• DR Congo's ongoing power shortages have necessitated sourcing electricity from Angola, which has a surplus of 3,000 MW. This supply is intended for the energy-intensive Copperbelt region in southeastern DR Congo and is scheduled for completion in 2029. As a private sector-led initiative, the project is also expected to benefit US companies through the sourcing of materials.

• The DR Congo is rich in copper and cobalt, and its mining sector is a major consumer of electricity. For instance, its major mining hub of Katanga province requires about 900 MW, with 600 MW specifically for mining operations. The country contributes about 70% of the world's cobalt and has new initiatives for local processing. With the global demand expected to surge, the electricity demand from the mining sector will continue to rise significantly.

• The country is a member of the Southern African Power Pool (SAPP) and has existing connections to Congo-Brazzaville and Zambia. There are also planned transmission lines connecting it to Uganda and Zambia. While intended to facilitate cross-border trade and help Zambia utilise the DR Congo's vast hydropower potential, this project will also serve to alleviate current power shortages within the DR Congo itself. There is also a plan to connect it with South Africa, Angola, Gabon, Namibia, Equatorial Guinea, Cameroon, and Chad.

• Building large hydropower generation projects typically takes a long time due to their complexity, environmental considerations, and sheer scale. While specific timelines vary, high-voltage transmission networks can often be constructed in less time than power plants. Although it may seem paradoxical for the DR Congo, with its massive potential for local generation, to prioritise building power lines for imports, this approach offers immediate relief from chronic power shortages.

• On the contrary, this reliance on imports compromises long-term energy security, exposing the DR Congo to external price changes and supply risks. It also means missing opportunities for job creation and local economic growth that would accompany the development of domestic infrastructure.

Our take

• The focus on building cross-border transmission lines is crucial for providing immediate energy relief. Given that these power lines serve the dual purpose of export and import, they lay the groundwork for the DR Congo, with its vast energy potential, to become a major energy exporter in the future.

• However, the country must not overlook the significant domestic economic opportunities that local generation will create. It needs to tap into its generation potential to ensure it does not miss out on substantial job creation, skill development, and broader economic growth that domestic energy infrastructure would create.

• The country should also focus on planning to meet the expected increase in electricity demand. How it meets this demand will be crucial for its economy. As the world's primary cobalt producer, increased mining and local processing, driven by the electric vehicle industry, will exert even greater pressure on an already overstretched national grid.