Explained: Why copper smelters are now paying to process ore—and what this means for India's clean energy future?
This shift is not only rewriting global smelting economics but also raising serious questions for India's industrial strategy, especially at a time when domestic copper demand is climbing due to the rise of renewable energy, electric vehicles, and power grid expansion.
What are TCRC and why do they matter?
TCRC—or Treatment and Refining Charges—are what smelters charge for processing copper concentrate into refined metal. Historically, these charges have provided a stable revenue stream to offset the costs of running smelters. But when concentrate supply tightens and smelting capacity outpaces ore availability, competition drives down TCRC. This has now reached an unprecedented point where the charges are so low that smelters are losing money on each tonne processed.
According to Rajib Maitra, Partner at Deloitte India, this sharp fall is due to three structural causes. First, mining disruptions in countries such as Panama, Peru, and the Democratic Republic of Congo have reduced global concentrate supply. Indonesia's ban on copper concentrate exports has made the market even tighter. Second, there has been a global decline in ore grades, making copper harder and more expensive to extract. And third, smelting capacity—particularly in China—is expanding faster than mine output, causing an imbalance in the global value chain.
How China's strategy shaped the TCRC collapse?
China's dominance in the copper smelting ecosystem is a key driver behind the collapse in TCRC. With over 44 percent of global refined copper capacity, China is not just a consumer but a commanding force in how global contracts are structured. Its state-owned enterprises (SOEs) have invested heavily in long-term offtake agreements and equity stakes in overseas copper mines. This gives Chinese smelters first access to concentrates and allows them to negotiate more favourable terms.
China has also led the world in building new smelting capacity, often subsidised or supported by the state, leading to global oversupply in refining infrastructure without a corresponding increase in ore. As Maitra notes, this has left smaller and newer smelters—especially those without mining assets—struggling to stay afloat in a market where the economics no longer work.
An industry expert, speaking anonymously, pointed out that China's grip is not commercial but strategic. 'The TCRC market is no longer market-driven—it's China-driven. Chinese SOEs control long-term contracts and have built capacity at a pace unmatched by mine supply. Their approach has been nationalist, not commercial. They locked up ore sources and now dictate global terms. New smelters outside China are entering a race with no oxygen.'
Where does India stand in this shifting global equation?
Indian smelters are somewhat insulated from this collapse, but only in the short term. Recent policy moves—such as the elimination of the 2.5 percent Basic Customs Duty on copper ore in the FY25 Budget and the removal of the duty on copper scrap in FY26—have reduced input costs for Indian refiners. In addition, domestic smelters have adopted modern technologies such as the Mitsubishi and NERIN processes. These allow for better metal recovery and more efficient use of by-products like gold, silver, and sulfuric acid. The latter is especially important in India, where sulfuric acid is a key input in the fertiliser sector and is subsidised.
These by-products have helped smelters partially offset the losses from
copper refining
, but only those with integrated operations and advanced recovery techniques have managed to do so. Greenfield or standalone smelters without secure access to concentrates remain vulnerable to market volatility.
What does the future look like for Indian copper refiners?
The situation is unlikely to improve unless India addresses its structural dependence on imported concentrates. As Pallab Dutta, Partner – Metals and Mining at PwC India, notes, 'The collapse in global TCRC levels has exposed a structural vulnerability in India's copper refining landscape—its heavy reliance on imported concentrates.'
He suggests two broad pathways to future resilience. One is to better organise the domestic copper scrap ecosystem, increasing recycling and reducing dependence on imported ore. The second is to accelerate copper mining within India, backed by policy reforms and faster project clearances. Without these interventions, the industry risks losing competitiveness as input costs continue to rise and margins remain squeezed.
What can government policy do to stabilize the industry?
Maitra believes a mix of trade, fiscal, and strategic policy tools can offer relief. One step could be reviewing Free Trade Agreements with regions like ASEAN, the UAE, and Japan, to prevent duty-free access for refined copper imports, which undercuts domestic smelters. Another is to consider raising the current five percent import duty on refined copper to give local refiners a buffer.
He also suggests exploring the idea of a Strategic Copper Reserve, similar to India's Strategic Petroleum Reserve, to ensure a steady supply of copper concentrates in times of global disruption. Government support in R&D for improving
by-product recovery
could also help improve the economics of copper refining.
Why this matters now more than ever?
India's
energy transition
is copper-intensive. From power grids and electric vehicles to solar panels and industrial wiring, copper is critical to meeting clean energy goals. As demand rises, the ability to refine copper domestically becomes a national economic and strategic priority.
If smelters continue to operate at a loss or scale down due to unviable margins, India could end up importing more refined copper at a higher cost. That could have a cascading effect on downstream industries, energy pricing, and manufacturing competitiveness.
Companies are now looking to secure long-term concentrate supply from copper-rich nations like Chile, Peru, and Australia to reduce dependence on volatile spot markets. Maximising the recovery of rare by-products such as molybdenum, selenium, tellurium, and nickel is also seen as a key lever to maintain profitability.
There is also growing focus on enhancing copper recycling and investing in secondary refining, which can offer more stable economics and environmental benefits.
The road ahead
The TCRC collapse is not just a market disruption; it is a signal of deeper structural shifts in the global copper supply chain. For India, the response will need to go beyond import duty tweaks and efficiency upgrades. It will require a national strategy that looks at resource security, trade policy, and supply chain resilience in an integrated manner.
If the country is serious about becoming a clean energy leader, it must ensure that its copper industry is not priced out of its own future.
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