CITIC SEC: The export ban in the Democratic Republic of the Congo may boost copper prices, and the copper sector is expected to experience a resonance in valuation and performance.

CITIC SEC has released a research report stating that the news of the ban on copper concentrate exports from the Democratic Republic of Congo may further stimulate bullish sentiment in the copper market, pushing copper prices to accelerate towards above $15,000 per ton. Amidst the cooling expectations of interest rate hikes by the Federal Reserve, frequent disturbances at mining sites, and the ongoing siphoning of global copper inventories by the U.S., the bank expects the copper sector to experience a resonant increase in both valuation and performance, recommending copper companies with high-quality copper mine assets and clear production growth paths. CITIC SEC's main points are as follows: Event: According to a Reuters report on August 6, the latest government order indicates that the Democratic Republic of Congo has banned the export of copper and cobalt concentrates (hereinafter referred to as the "ban"). This order, signed on June 29, is co-signed by the Minister of Mines, the Minister of Foreign Trade, and the Minister of National Economy of the Democratic Republic of Congo. The order clearly 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-products tax system has a three-month transition period. The order states that in "strategic" circumstances, the Minister of Mines may approve a one-year exemption from the export ban. The ban has a limited impact on global copper supply and the operations of Chinese-funded enterprises. According to data from the Ministry of Mines of the Democratic Republic of Congo, the country is projected to produce 3.485 million tons of copper by 2025, including 2.848 million tons of cathode copper and 471,000 tons of copper concentrate, with 371,000 tons of copper concentrate earmarked for export. Kamoa-Kakula, as the largest copper concentrate production project in the region, has its associated smelter with a capacity of 500,000 tons per year scheduled to commence production by the end of 2025. According to announcements from Ivanhoe Mines, Kamoa copper concentrate will be completely processed at its own smelter or local smelters in the first quarter of 2026. Data from the Ministry of Mines of the Democratic Republic of Congo indicate that the copper concentrate exports containing copper in the first quarter of 2026 will only total 18,900 tons, a year-on-year decrease of 82.3%, accounting for about 0.3% of global copper production. Based on various companies' announcements, most of the copper production capacity of Chinese enterprises in the Democratic Republic of Congo is from hydrometallurgical copper projects (which produce cathode copper), while some pyrometallurgical projects produce copper concentrates that will be smelted on-site into anode copper and other products that are not impacted by the ban. Coupled with the export exemption policy, the bank assesses that the ban will have limited impact on the production and operations of Chinese-funded copper enterprises in the Democratic Republic of Congo. The ban may further boost market sentiment, driving copper prices to new highs. Although the bank expects that this ban will have a limited impact on global copper supply, the current copper market is at a critical point characterized by frequent supply disturbances and continued declines in local inventories. The ban may exacerbate market concerns over supply tightness, and the signals conveyed by the ban regarding resource countries strengthening raw material controls and seeking to extend the industrial chain, as well as resource protectionism, will also bring uncertainty to long-term copper supply growth. As of August 5, 2026, LME copper prices closed at $14,150 per ton, and the bank expects that this sentiment may accelerate the LME copper price towards above $15,000 per ton. The copper sector is expected to witness a resonant increase in performance and valuation. As of August 6, the forecasted PE ratio for CITIC copper sector for 2026/2027 is 12.3/10.5 times (based on Wind consensus), still at historical lows. With the cooling expectations of interest rate hikes by the Federal Reserve, the macro pressure on copper sector allocations has eased, and the valuations of copper industry companies, which have been under pressure in the first half of the year, are expected to recover. Additionally, the recent continuous rise in copper prices will also enhance performance expectations for related companies, allowing copper industry companies to benefit from a resonance in both performance and valuation, thus driving the sector upwards. Risk factors: The enforcement of the Democratic Republic of Congo's copper concentrate export ban may be weaker than expected; the timing, method, or magnitude of U.S. tariffs on copper may not meet expectations; high copper prices may lead to weaker-than-expected downstream demand; risks to liquidity caused by escalating conflicts between the U.S. and Iran.