China Tightens Requirements for New Copper Smelters
China has tightened requirements for building new copper smelters, in its latest attempt to curb relentless capacity expansion in the world’s top producer of the refined metal.
New Requirements for Copper Smelters
Companies building new copper smelters should control enough mine supply – via outright ownership or equity stakes – to feed the plants, according to a 2025-2027 development plan for the country’s copper industry jointly issued by 11 ministries. This condition would likely be met by only a small number of major Chinese companies.
Copper Industry Facing Challenges
The sector has seen cut-throat competition for raw material as mines across the world faced production disruptions, falling grades, and higher exploration costs. Spot processing fees have plunged below zero, causing industry-wide losses and threatening output cuts at Chinese plants.
Government Intervention
The China Nonferrous Metals Industry Association last October called for curbs on new smelters as a “top priority” and urged the copper sector to learn from government intervention in the steel and aluminium industries.
Copper Production and Reserves
About 85 per cent of concentrate used in Chinese plants is imported, according to data from the US Geological Survey. The country produced 12 million tonnes of refined copper in 2023, while mined output was at 1.7 million tonnes. Total reserves of the red metal stood at 41 million tonnes as at 2023, or 4.1 per cent of the global total, according to USGS.
Government Plan to Boost Domestic Copper Mine Resources
The country aims to boost domestic copper mine resources by 5 to 10 per cent in three years to secure raw material supply, according to the government plan.
Additional Measures
China will also encourage copper smelters to sign long-term purchase agreements with global miners, boost imports of copper blister and anode, and encourage scrap imports, according to the plan.
Conclusion
China’s efforts to curb capacity expansion in the copper industry are a positive step towards sustainability and ensuring the long-term viability of the sector. By tightening requirements for new smelters and encouraging cooperation between miners and smelters, the government can help to reduce competition for raw materials and ensure a stable supply chain.
FAQs
Q: What are the new requirements for building new copper smelters in China?
A: Companies building new copper smelters should control enough mine supply – via outright ownership or equity stakes – to feed the plants.
Q: What is the main challenge facing the copper industry?
A: The sector has seen cut-throat competition for raw material as mines across the world faced production disruptions, falling grades, and higher exploration costs.
Q: What is China’s plan to boost domestic copper mine resources?
A: The country aims to boost domestic copper mine resources by 5 to 10 per cent in three years to secure raw material supply.
Q: What additional measures is China taking to support the copper industry?
A: China will also encourage copper smelters to sign long-term purchase agreements with global miners, boost imports of copper blister and anode, and encourage scrap imports.
Q: What is the current copper production and reserve situation in China?
A: China produced 12 million tonnes of refined copper in 2023, while mined output was at 1.7 million tonnes. Total reserves of the red metal stood at 41 million tonnes as at 2023, or 4.1 per cent of the global total, according to USGS.
