China's copper boom under threat as miners test bargaining power
[BEIJING] The unrelenting expansion of Chinese copper processing capacity over the past few years has now become a global headache, as smelters scramble to secure the ore they need to produce the vital industrial metal.
Output in the world's top producer of the refined metal has ballooned to a record this year, even in the face of trade tensions wars that are clouding the outlook for demand. The resulting competition has handed bargaining power to some of the world's largest miners.
Copper treatment charges, typically a key earner for processors, have plunged deep below zero on the spot market. Chilean miner Antofagasta has proposed negative charges for contracted supplies to smelters in the second half.
The fraught situation for smelters worldwide is fuelling expectations of cuts – Glencore shut a facility in the Philippines in February. It's also focusing market attention on the surprising resilience of China's output, and raising the question of how long that can last.
Analysts and industry executives say China's output is more resistant to financial pressures because it is now dominated by state-owned producers and by relatively large, efficient and low-cost smelters. Three major new plants were opened just last year, more than offsetting the pain felt by more modest operations.
But there's also a still-substantial segment of China's market that is made up of smaller, privately owned smelters with more exposure to a tightening spot market. CRU Group says those plants account for about a quarter of the country's output.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
'Even if you have very deep pockets and are willing to operate at a loss, at the end of the day you might have to cut production because you simply cannot get the copper concentrate,' said Craig Lang, principal analyst at CRU Group.
The stakes are high for the global copper smelting industry. With all high-cost facilities facing losses, every ton that resists financial pressure in China means more pain for those elsewhere.
Spot treatment charges to process concentrate fell to negative levels in December, and reached minus US$60 a tonne last month. The fees are deducted from the cost of concentrate and ordinarily make up a large chunk of smelter revenues. Term supplies are now threatening to slide into negative territory too, meaning smelters are effectively paying more for copper ore than the value of the metal contained in it.
In February, when fees were less punitive than they are now, Glencore chief executive officer Gary Nagle said he wouldn't keep open loss-making copper plants. The company mothballed a smelter in the Philippines and is cutting costs at plants in Canada.
Older European copper smelters could be at risk, while Japanese plants may be sheltered due to their parent companies' stakes in Chilean mines, said Grant Sporre, an analyst at Bloomberg Intelligence. 'It's going to be a tough battle for survival.'
Outlook worsening
Granted, the plunge in fees is partly due to relatively slow growth in mine output worldwide – but it's primarily driven by the rapid increase in smelting capacity. China's refined copper output is set to rise 10 per cent in the first half of this year and nearly 5 per cent for the full year, according to researcher Shanghai Metals Market.
The argument for China's resilient output rests largely on the belief that state-owned plants are protected because local governments want to safeguard jobs and the economy.
'This is a consequence of an economic model that is less responsive to prevailing market conditions as plants can run on very thin margins – or even make losses – for extended periods of time,' Savant, a joint venture by Marex Group and geospatial analysis company Earth-i, said in a note last month.
Although cutting overcapacity across the Chinese economy has become a more important policy priority for Beijing recently, so called 'future-friendly' industries such as copper, a metal required for electrification and so for the energy transition, are being given more leeway than sectors seen to be in structural decline, such as oil refining.
For producers outside China, there is no such cushion. The suspension of Ivanhoe Mines' Kakula copper mine in central Africa has been a blow to ore supply – and at the same time developments such as the ramp-up of Freeport McMoRan's Manyar smelter in Indonesia are adding more refining capacity to the market.
Big smelters may still be able to maintain production for now, following some years of healthy cash flow, said Yongcheng Zhao, an analyst at Benchmark Minerals Intelligence. The less-efficient ones, though, are at risk. BLOOMBERG
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
an hour ago
- Business Times
The US$30 million plan to overhaul tourism around Egypt's pyramids
[CAIRO] Some 2.5 million people visit the Pyramids of Giza each year with hopes of an epic experience befitting one of the World's Seven Wonders. But for decades, a trip to Egypt's most famous tourist spot meant battling crowds and parrying aggressive hawkers. Now, thanks to a US$30 million revamp that rethinks the experience, seeing the pyramids is finally inspiring more awe than agony. A network of buses whisks visitors around the site, the hard-sells have been tamed – and you can even enjoy some fine dining overlooking the 4,600-year-old monuments. All this officially debuts on Jul 3 – a milestone seven years in the making. In 2018, the Egyptian government signed a public-private partnership deal with Egyptian billionaire Naguib Sawiris' Orascom Pyramids Entertainment (OPE) to overhaul the Giza Plateau, the area west of Cairo on which the ancient structures sit. A soft launch began in early April, allowing OPE to make improvements and address shortcomings ahead of a wider reveal, OPE executive chairman Amr Gazarin said. The firm will operate the location for the next 11 years, drawing revenue not from ticket sales – which the government is solely entitled to – but from VIP tours, sponsorship deals and commercial leases on the grounds. The opening date coincides with the long-awaited inauguration of the Grand Egyptian Museum – the US$1 billion flagship attraction sitting about a mile away. Taken together, the two projects represent some of the biggest strides yet in Egypt's goal of doubling annual visitors to 30 million within a decade. It's a target that would put it roughly on par with Greece, making it one of the most-visited countries in the world. New gate, new rules One of the key changes was to make the Giza Plateau car-free. Instead of driving up a winding road in the shadow of the Great Pyramid, visitors now enter via a gate on a highway 1.5 miles to the southwest. A NEWSLETTER FOR YOU Friday, 2 pm Lifestyle Our picks of the latest dining, travel and leisure options to treat yourself. Sign Up Sign Up After passing through the so-called Great Gate and buying tickets, visitors navigate a gleaming hall of introductory exhibits before boarding new hop-on, hop-off buses. Within minutes, they can be dropped off at the feet of the three colossal pyramids, each built from 80 tonnes limestone blocks. The iconic Great Sphinx lies further below. At bus stops around the site they will find facilities that were long-lacking, including upgraded restrooms, formal souvenir stores and cafes. And, with the opening of several eateries in recent years, you can finally order a meal on-site. Khufu's, which serves up a deluxe twist on Egyptian staples and has a terrace overlooking the pyramid built for the pharaoh of the same name, has been ranked one of the Middle East and North Africa's top restaurants by the World's 50 Best. 'It wasn't a good experience before, for sure,' said Mariam Al-Gohary, 37, an Egyptian-Canadian citizen who visited the pyramids in mid-May for the first time in 15 years. 'Now it's like going to the museum,' said Al-Gohary, who works in human resources in Calgary, Alberta. 'It looks like what you would expect a big tourist destination.' Visitor numbers were up almost 24 per cent in April compared to the year before, according to the Tourism Ministry. Egypt's tourist sector is already on a tear and saw record arrivals in the opening months of 2025, though, so it's unclear how much the project itself drove the increase. Tackling horsemen OPE's Gazarin says Egyptian authorities are also helping the company tackle a critical issue: hawkers offering horse and camel rides. They have long been accused of being aggressive and overcharging as they literally and figuratively take tourists for a ride. Al-Gohary from Calgary recalled that when she and her friend rode camels in 2010, the owner demanded extra money to have the animals kneel so they could dismount from them – an infamous ploy. She avoided them altogether on this year's visit. For first-time visitors, it's now easier to avoid getting swept up by the scams. The new setup has denied horsemen and hawkers the access they had to the old entrance, where they were accused of accosting tourists. Authorities have allocated horsemen a separate and relatively isolated area, but many have been defiant and pushed for positions closer to the pyramids. It's a work in progress, says Gazarin, who expects Egyptian authorities to gradually tighten the limits to better ensure enforcement. 'People were afraid to go to the pyramids' because of the issue, he said. He rues the fact the pyramids draw just 2.5 million visitors a year – half of them Egyptian. By comparison, over 12 million went to the Colosseum in Rome in 2023. But Gazarin knows it will take time to build up those numbers, especially in the face of regional conflicts that create some amount of local unpredictability. What matters, he says, is that the numbers trend upwards. 'It's unacceptable the world's most important monument attracts just above one million foreigners.' BLOOMBERG

Straits Times
an hour ago
- Straits Times
Auto companies ‘in full panic' over rare-earths bottleneck
Car executives have once again been driven into their war rooms, concerned that China's tight export controls on rare-earth magnets could cripple production. PHOTO: REUTERS BERLIN/LONDON/DETROIT - Frank Eckard, chief executive of a German magnet maker, has been fielding a flood of calls in recent weeks. Exasperated automakers and parts suppliers have been desperate to find alternative sources of magnets, which are in short supply due to Chinese export curbs. Some told Mr Eckard their factories could be idled by mid-July without backup magnet supplies. 'The whole car industry is in full panic,' said Mr Eckard, CEO of Magnosphere, based in Troisdorf, Germany. 'They are willing to pay any price.' Car executives have once again been driven into their war rooms, concerned that China's tight export controls on rare-earth magnets – crucially needed to make cars – could cripple production. US President Donald Trump said on June 5 that Chinese President Xi Jinping agreed to let rare earths minerals and magnets flow to the United States. A US trade team is scheduled to meet Chinese counterparts for talks in London on June 5. The industry worries that the rare-earths situation could cascade into the third massive supply chain shock in five years. A semiconductor shortage wiped away millions of cars from automakers' production plans, from roughly 2021 to 2023. Before that, the Covid-19 pandemic in 2020 shut factories for weeks. Those crises prompted the industry to fortify supply chain strategies. Executives have prioritized backup supplies for key components and reexamined the use of just-in-time inventories, which save money but can leave them without stockpiles when a crisis unfurls. Judging from Mr Eckard's inbound calls, though, 'nobody has learned from the past,' he said. This time, as the rare-earths bottleneck tightens, the industry has few good options, given the extent to which China dominates the market. The fate of automakers' assembly lines has been left to a small team of Chinese bureaucrats as it reviews hundreds of applications for export permits. Several European auto-supplier plants have already shut down, with more outages coming, said the region's auto supplier association, CLEPA. 'Sooner or later, this will confront everyone,' said CLEPA secretary-general Benjamin Krieger. Cars today use rare-earths-based motors in dozens of components – side mirrors, stereo speakers, oil pumps, windshield wipers, and sensors for fuel leakage and braking sensors. China controls up to 70 per cent of global rare-earths mining, 85 per cent of refining capacity and about 90 per cent of rare-earths metal alloy and magnet production, consultancy AlixPartners said. The average electric vehicle uses about .5 kg of rare earths elements, and a fossil-fuel car uses just half that, according to the International Energy Agency. China has clamped down before, including in a 2010 dispute with Japan, during which it curbed rare-earths exports. Japan had to find alternative suppliers, and by 2018, China accounted for only 58% of its rare earth imports. 'China has had a rare-earth card to play whenever they wanted to,' said Mark Smith, CEO of mining company NioCorp, which is developing a rare-earth project in Nebraska scheduled to start production within three years. Across the industry, automakers have been trying to wean off China for rare-earth magnets, or even develop magnets that do not need those elements. But most efforts are years away from the scale needed. 'It's really about identifying ... and finding alternative solutions' outside China, Joseph Palmieri, head of supply chain management at supplier Aptiv, said at a conference in Detroit last week. Automakers including General Motors and BMW and major suppliers such as ZF and BorgWarner are working on motors with low-to-zero rare-earth content, but few have managed to scale production enough to cut costs. The EU has launched initiatives including the Critical Raw Materials Act to boost European rare-earth sources. But it has not moved fast enough, said Noah Barkin, a senior advisor at Rhodium Group, a China-focused US think tank. Even players that have developed marketable products struggle to compete with Chinese producers on price. David Bender, co-head of German metal specialist Heraeus' magnet recycling business, said it is only operating at 1 per cent capacity and will have to close next year if sales do not increase. Minneapolis-based Niron has developed rare-earth free magnets and has raised more than US$250 million (S$322 million0 from investors including GM, Stellantis and auto supplier Magna. 'We've seen a step change in interest from investors and customers' since China's export controls took effect, CEO Jonathan Rowntree said. It is planning a US$1 billion plant scheduled to start production in 2029. UK-based Warwick Acoustics has developed rare-earth-free speakers expected to appear in a luxury car later this year. CEO Mike Grant said the company has been in talks with another dozen automakers, although the speakers are not expected to be available in mainstream models for about five years. As auto companies scout longer-term solutions, they are left scrambling to avert imminent factory shutdowns. Automakers must figure out which of their suppliers – and smaller ones a few links up the supply chain – need export permits. Mercedes-Benz, for example, is talking to suppliers about building rare-earth stockpiles. Analysts said the constraints could force automakers to make cars without certain parts and park them until they become available, as GM and others did during the semiconductor crisis. Automakers' reliance on China does not end with rare earth elements. A 2024 European Commission report said China controls more than 50 per cent of global supply of 19 key raw materials, including manganese, graphite and aluminum. Andy Leyland, co-founder of supply chain specialist SC Insights, said any of those elements could be used as leverage by China. 'This just is a warning shot,' he said. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
an hour ago
- Business Times
Crown close to A$80 million sale of Sydney penthouse: report
[WELLINGTON] Crown Resorts is close to selling a penthouse in its Sydney skyscraper for about A$80 million (S$67 million), some A$20 million less than initially hoped for, the Australian Financial Review (AFR) reported. A local buyer, using a structured deal, is said to be about to secure the six-bedroom apartment on the 81st floor of the 271-metre-tall One Barangaroo tower, the AFR said, citing unidentified industry sources. The 800-square-metre (8,600-square-foot) duplex had been on the market since at least 2021 when the tower was completed. Conceived in an age when Chinese cash flooded the globe, elevating asset prices from Sydney to London, the property's target market has all but disappeared. With a sale proving elusive, last year the asking price was cut by 10 per cent to A$90 million and TV personality Monika Tu was named as selling agent alongside Knight Frank. A few months later, it was relaunched and The Agency and Colliers International Group were hired to push the sale. Crown, The Agency and Colliers were not immediately available to comment. The complex was a pet project of billionaire James Packer before the uncovering of wrongdoing at Crown's casinos in Melbourne and Perth prompted him to sell his stake in the company. BLOOMBERG