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The Star
3 days ago
- Business
- The Star
China's copper boom under threat as miners test bargaining power
This photo taken on May 17, 2025 shows the Dexing Copper Mine, an open-pit copper mine in Dexing, in China's central Jiangxi province. China's refined copper output is set to rise ten per cent in the first half of this year and nearly five per cent for the full year. - AFP 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 Plc has proposed negative charges for contracted supplies to smelters in the second half. The fraught situation for smelters worldwide is fueling expectations of cuts - Glencore Plc 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. "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 tonne 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-$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 Plc 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.' 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 ten per cent in the first half of this year and nearly five 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 Plc 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 like 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 Ltd.'s Kakula copper mine in central Africa has been a blow to ore supply - and at the same time developments like the ramp-up of Freeport McMoRan Inc.'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 Ltd. The less-efficient ones, though, are at risk. - Bloomberg
Business Times
3 days ago
- Business
- Business Times
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
Reuters
19-03-2025
- Business
- Reuters
European bismuth prices rocket to record highs on China export curbs
March 19 (Reuters) - Bismuth prices in Europe have surged to all-time highs as China's export controls squeeze supplies of the mineral used in atomic research, cosmetics and pharmaceuticals, according to traders and experts. Prices of bismuth have jumped to $40 a lb on the European spot market, an all-time high, up from $6 per lb in late January, a more than six-fold rise. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. In the United States, bismuth prices are even higher - at $55 a lb compared with $6.5-$7 before China's export curbs. Traders said U.S. prices were also higher because of the tariffs imposed by U.S. President Donald Trump on imports from top producer China. China in February announced plans to impose export controls on five key metals, opens new tab - tungsten, tellurium, molybdenum, bismuth, and indium - in response to Trump's import tariffs. "At the moment there are no supply sources to fully replace Chinese material," commodity analysts with business intelligence company CRU Group told Reuters. "As much of the supply tightness is based on policy, it can ease very quickly. But assuming a full stop of Chinese bismuth exports, new capacity ex-China would be necessary." According to the U.S. Geological Survey (USGS), China was responsible for producing around 13,000 metric tons of mined bismuth last year or more than 80% of the global total. The rest comes from countries such as Japan, South Korea, and Laos. Prices have risen significantly, making it risky to ship materials for stockpiling since delivery takes about two months and no one knows where the market will be by then, said a Europe-based trader. "This situation is causing a very low unsold inventory level internationally, keeping the price for prompt material at a very high level," he added. Meanwhile, the most active bismuth contract on the Wuxi Stainless Steel Exchange was trading at 163,800 yuan ($22,677) per metric ton on Tuesday, 105% higher than at the beginning of the year.
Yahoo
18-02-2025
- Business
- Yahoo
Trump Wants Ukraine's Minerals. But What Exactly Is Up for Grabs?
(Bloomberg) -- Ukraine's mineral wealth has been thrown into the spotlight as US President Donald Trump looks to seize control of its resources in return for military support. Yet very little is actually known about what's up for grabs. Why Barcelona Bought the Building That Symbolizes Its Housing Crisis Por qué Barcelona compró el edificio que simboliza su crisis inmobiliaria Trump Child Refugee Agency Shares Data With Immigration Enforcers A Filmmaker's Surreal Journey Into His Own Private Winnipeg NYC Restaurants Are Still Waiting for Their Outdoor Dining Plans to Be Approved Various reports have suggested that Ukraine has mineral deposits worth upwards of $10 trillion, and President Volodymyr Zelenskiy's government has been keen to promote crucial materials that can be exploited as it seeks more military and economic support. Rare earth elements — which play a key role in defense and other high-tech industries — have become a particular focus for Trump as he seeks to secure supplies of critical minerals. The President said last week he wanted the equivalent of $500 billion worth of rare earth. But Ukraine has no major rare earth reserves that have been internationally recognized as economically viable. While the country has reported a series of deposits, little is known about their potential — most of them appear to be by-products of producing materials like phosphates, while some are in areas of Russian control. 'Rare earths are so niche that they typically don't produce the more detailed studies publicly, so there's just not enough information,' said Willis Thomas, principal consultant at CRU Group. The market for rare earths — which are mainly used in high-strength magnets — is minuscule compared with commodities like copper or oil. The numbers are still small even if other key specialty minerals found in Ukraine are added to the mix: Last year, the US imported about $1.5 billion of rare earths, titanium, zirconium, graphite and lithium combined, according to Bloomberg calculations based on data from the US Geological Survey. What Are the Rare Earth Metals Trump Has His Eye On?: QuickTake Information on Ukraine's rare earth deposits have primarily been drawn from government data, and even the former head of the country's geological survey said that there had been no modern assessment of the countries resources, S&P Global reported last week. Even if Ukraine does have any economically viable deposits, the West still has a bigger challenge to overcome — mining them is relatively easy, but processing the raw material is much harder. China accounts for roughly 60% of mined supply, but crucially about 90% of separation and refining capacity. Beijing has also flexed its muscles in recent years as tensions ratcheted up with the US over access to semiconductors. Any deal with Ukraine 'doesn't really solve that pain point,' Thomas said. The US 'still needs to have a value chain that is primarily ex-China that is separation and magnet making and this simply doesn't exist at this point.' Western miners have largely failed to build their own rare-earth businesses, stifled by environmental issues, processing challenges, extreme price volatility and the difficulties in competing with Chinese producers. For example, Australia's Lynas Rare Earths Ltd., one of the few producers outside of China, has been dogged by concerns over radioactive waste and community opposition to a processing plant in Malaysia. In the US, Molycorp Inc. dominated the industry there before collapsing. Its successor MP Materials Corp., which operates the Mountain Pass project in California, was criticized in the past for sending raw materials to be processed in China. Washington has provided funding to both Lynas and MP to develop processing in the US. How Rare? Like many critical minerals, rare earths are relatively abundant globally, but don't often exist in large enough concentrations to be extracted and refined economically. Outside of China, the largest reserves are found in Brazil, India, Australia, Russia, Vietnam, and the US, according to the USGS. Rare earths play a key role in defense and other high-tech industries, being used in everything from iPhones to laser-guided missiles. A F-35 fighter jet requires more than 900 pounds of rare earth elements, while each Virginia-class nuclear submarine contains 9,200 pounds, according to the US Defense Department. Ukraine had not received much interest before Russia's full-scale invasion from the world's biggest mining companies, who've spent much of the last two decades scouring the globe for untapped metal deposits. The country's main established miner is Ferrexpo Plc, a London-listed iron ore company that produces some of the highest grade pellets used to make steel. Steelmaker Metinvest BV mines coal and iron ore. The country also produces uranium. Trump's Interest Trump has made securing resources for the US and tackling China's dominance of certain raw materials a cornerstone of his foreign policy so far. He has targeted Panama over access to its crucial waterway, homed in on Greenland's mineral riches — mooting a potential takeover of the Danish territory — and now linked securing Ukraine's resources as a key part of ongoing support in its war with Russia. Ukraine has also been keen to promote its lithium, graphite and titanium deposits. The country says it has the Europe's biggest deposit of lithium, a material that is abundant around the world. Demand has surged because of its crucial use in rechargeable batteries, but production has risen far ahead of demand and prices have crashed in recent years. In the case of titanium, Ukraine isn't necessarily producing the form that America's defense industry needs. Ukraine is a top-ten producer of two titanium-bearing minerals called ilmenite and rutile, and in the US, 95% of those materials are used to make a common white pigment. Ukraine has no capacity to produce titanium sponge, the form of the metal used in jet engines, armor plating, and other defense applications, according to USGS data. 'Titanium, the ilmenite and rutile, the main raw materials there, they're found across the world and it's really about ease of extraction, ease of processing and how easily it is shipped,' said Thomas. --With assistance from Daryna Krasnolutska, Jeremy Diamond and Alberto Nardelli. 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