explorers, an additional US$31 billion in exploration spending would have been undertaken between 1997 and 2022. Zambia would have received an additional US$7 billion.

_Table 3: Missing Copper Grassroots Exploration Spending in DRC and Zambia, 1997-2022_

||Land Area (sq km)|Spending per<br>10,000sqKm($M)|Potential Project<br>Spending ($M)|Actual Project<br>Spending ($M)|Missing Project<br>Spending ($M)|
|---|---|---|---|---|---|
|Chile|756,950|150.6|11,399|11,399|0|
|DRC|2,345,000|16.7|35,513|3,907|31,406|
|Zambia|572,614|28.5|8,623|1,630|6,993|

_Source: authors’ calculations based on S&P Capital IQ Database._ Note that we only report missing exploration project spending. A fraction of these projects end-up finding mineral resources and mineral reserves, and another fraction end up in production. The missing total investment spending over this 25-year period is many multiples of the missing exploration spending. To estimate this lost spending, we have compiled fairly complete economic data on a subset of 48 of the 53 projects in Figure 16. The average initial capital spending on a copper project that reaches the go-ahead stage post exploration is US$1 billion. The average operating cost per ton of ore then extracted and processed is US$47. The average amount of copper ore planned to be mined and processed at a project over its life is 387 million tonnes, for an average planned project operating cost spent of US$18 billion over the life of mine, much of which is spent domestically. It is impossible to say how many additional operating projects DRC and Zambia would have if companies had respectively spent the missing US$31 billion and US$7 billion on exploration. Our point is simply that there are substantial knock-on effects from this lack of exploration spending in terms of missing operating projects with large domestic cash spending.

It is obvious that Chile may have factors other than direct political risk that draw mining companies there instead of DRC and Zambia. Geologists may simply be more familiar with copper exploration targets in Chile, or there may be a longer and more complete history of geological mapping. Companies may prefer the absence of tropical disease. Or they may determine that the available infrastructure and skilled labor pool is vastly superior in Chile and allows them to build lower-cost mines. Electrical power, for example, is lacking in DRC and Zambia.<sup>47</sup> The increased capital and operating costs must be recovered by finding and mining a higher quality resource that generates sufficient revenue. The Kamoa-Kakula project in DRC is such a resource. Ivanhoe Mines, the Kamoa-Kakula’s owner, plans to spend US$128 million to refurbish several DRC hydroelectric plants to secure sufficient electrical power for the project.<sup>48</sup> We investigate this next.

C. Poor Quality of Infrastructure and Services versus Poor Governance Poor quality of infrastructure and services (i.e, lack of infrastructure, lack of ancillary services, lack of skilled labor, etc.) and poor governance or political risk (i.e., corruption, weak rule of law, insecurity, etc.) both contribute to bypassing economic but lower-grade deposits. To try to tease out these two effects, Table 4 compares the three countries on a number of metrics that may influence exploration company decision-making on where to spend their exploration budgets. We also add Botswana, which has the

> 47 “Mining in Africa’s Copperbelt,” _Engineering and Mining Journal, E&MJ, Global Business Reports,_ February (2014): 43, 80-119.

> 48 OreWin, (March 2020). In return for the capital spending, the project will receive electric power from the grid at a reduced tariff.

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