Viewpoint: Cu smelting capacity to outpace mining

The global copper concentrate market will likely remain tight in 2025, as an expected rise in copper smelting production capacity is set to outpace new copper mining projects and expansions.

Argus expects 2.8mn t/yr of copper smelting capacity to come on stream next year, with 1.25mn t/yr of this coming from China and 1.55mn t/yr from the rest of the world.

Major Chinese copper producer Tongling Nonferrous plans to launch two copper smelters in the second half of 2025, with a combined production capacity of 800,000 t/yr. The firm's 500,000 t/yr Tongling Jinxin smelter is expected to start up in the middle of 2025, pushed back from an initial launch date of the end of this year because of tight supply of copper concentrate feedstock. And the firm's 300,000 t/yr Tongling Jintong smelter is projected to start operations in October, with 200,000 t/yr of refined copper and 100,000 t/yr of copper anode production. But the company has not confirmed if it has secured enough copper concentrate to support either project.

Major Chinese metals producer Guangxi Jinchuan Nonferrous is expected to begin operations at its new smelter at the end of this year, with a copper anode output capacity of 300,000 t/yr. And fellow domestic company Huading Copper finished building a new 100,000 t/yr refined copper project in November, according to market participants.

Elsewhere, Indian conglomerate Adani launched a 500,000 t/yr smelter earlier this year and is expected to steadily ramp up to production capacity by 2026. Indonesian mining company PT Amman had planned to launch a 200,000 t/yr copper smelter in the fourth quarter of this year. US-based firm Freeport's Indonesian subsidiary is projected to resume production at its 300,000 t/yr Manyar smelter in the third quarter of 2025 after the facility was brought off line following a fire in October. And a 500,000 t/yr blister copper smelter at the Kamoa-Kakula mine in the Democratic Republic of Congo is expected to begin production in February.

Supply growth

Growth in copper concentrate supply next year is expected to mainly come from expansion projects at existing mines, with 1.2mn t/yr of additional mining capacity in the pipeline, according to Argus calculations.

The first phase of Russia's Malmyzh mine is due to start operations in 2025, with a copper production capacity of 150,000 t/yr. Mongolia's Oyu Tolgoi mine will continue ramping up production next year, in a bid to lift its copper output to 500,000 t/yr by 2028 from 168,100t in 2023. And the commissioning of Kamoa-Kakula's phase 3 in August 2024 will lift copper output at the mine to 600,000 t/yr in 2025 from 450,000 t/yr previously.

Two mining expansions in Chile are expected to boost global copper production next year. Australian mining group BHP is scheduled to lift copper cathode output at its Escondida mine to 410,000 t/yr over a 10-year period, having produced 198,600t in the July 2023-June 2024 fiscal year. And Chilean copper producer Codelco's El Teniente mining project is due to increase copper output to 500,000 t/yr by 2025 from 245,500 t/yr in January-September.

Lower utilisation rates

But mining supply growth may be insufficient to meet the additional demand from new and expanded smelting capacity, meaning global copper smelters will likely have to reduce their utilisation rates to 70pc in 2025 from 75pc this year, according to industry forecasts.

"The Onsan copper smelter in South Korea is likely to cut its output by 100,000t to 550,000t for 2025, because of concentrate supply tightness," a trading company told Argus.

Some Chinese smelters have already cut production capacity in response to tight copper concentrate supply or because of accidents at their facilities. "Liaoning Shenghai Copper, Guangxi Nanguo Copper, Baiyin Nonferrous, Chifeng Fubang Copper and Daye Yangxin Hongsheng have suspended operations, removing a combined 1mn t/yr of production capacity," a trader said.

Extended talks over 2025 benchmarks

Annual benchmark talks between Chinese smelters and representatives from Chile-based mining firm Antofagasta for copper concentrate supplies in 2025 were subject to long delays. Major Chinese smelter Jiangxi Copper and Antofagasta finally settled their treatment and refining charges for copper concentrate supplies for 2025 on 5 December, at $21.25/t and 2.125¢/Ib respectively, down from $80/t and 8.0¢/Ib in 2024, according to market participants.

Chinese copper smelters and overseas concentrate suppliers usually agree charges during the Asia Copper Week conference, which was this year held in Shanghai over 13-14 November. But settlements were delayed to early December because of the two sides' significant differences in price ideas. Antofagasta quoted $10/t for treatment charges in the first round of negotiations, but smelters bid $45/t and conceded to $35/t, market participants told Argus.