Copper Processing Costs Could Hit 15-Year Low Amid Industry Changes

Copper processing costs are on a downward trend, potentially reaching their lowest level in 15 years by 2025. This decline is driven by a combination of disruptions at mining operations and an increase in smelting capacity, primarily in China.

The reduction in Treatment and Refining Charges (TC/RCs) for copper is expected to put significant pressure on profit margins across the industry. Current forecasts suggest that TC/RCs could drop sharply, with expectations ranging from the high teens to around $50 per metric ton for 2025, a stark contrast to this year's $80. This would be the steepest decline in processing costs since 2010. These lower charges are likely to coincide with a growing shortfall in global copper concentrate, expected to increase from 221,000 tons in 2023 to 822,000 tons by 2025. Meanwhile, China’s smelting capacity is set to rise to 16 million tons, adding to the existing market pressures. Such dynamics could strain smelters, potentially squeezing profits and delaying production schedules.

For the market, these changes suggest a turbulent period ahead for the copper industry. The anticipated drop in TC/RCs could disrupt the global copper market, leading to heightened volatility for miners and processors alike. Unexpected disruptions, such as accidents at major mining operations, could further alter copper supply, affecting leverage and destabilizing prices. The increasing use of recycled copper, particularly in China, is also altering the landscape, with growing imports of recycled material changing supply patterns. Market participants will need to adapt quickly to remain competitive, as these shifts are likely to impact copper pricing and investment strategies.

This expected decline in TC/RCs reflects a broader realignment in global copper markets, influenced by supply chain disruptions and evolving trade flows. As China continues to expand its smelting and recycling efforts, demand for imports may decline, reshaping global copper trade. This ongoing recalibration holds major implications for global economic strategies and industrial policies, emphasizing the need for adaptive approaches to manage resource scarcity and changing market conditions.