China Considers Regulating its Copper Smelting Capacity

China, the world’s largest copper smelter, is exploring measures to impose stricter rules on the expansion of refining output as historically low processing fees continue to squeeze earnings. According to Chen Xuesen, vice chairman of the China Nonferrous Metals Industry Association, the smelting industry’s biggest challenge stems from depressed processing costs, which have been driven down by destructive competition among smelters. 

The association is a national non-profit body based in Beijing, representing more than 1,000 enterprises in the non-ferrous metals sector. It plays a central role in setting industry standards, promoting green production, and recommending adjustments to manage raw material supply and overcapacity. 

In a recent industry meeting, Xuesen noted that miners’ payments to smelters for processing copper, including treatment and refining charges, had fallen sharply thus undermining profitability. 

The meeting brought together representatives from major copper smelters, among them Zijin Mining, Jinchuan Group, China Minmetals, Jiangxi Copper, Daye Nonferrous, China Copper, . and Tongling Nonferrous. This decline, he explained, followed a major expansion in refining capacity that outpaced mined supply, tightening concentrate availability. As a result, copper output dropped 2.5% in July. 

In response, political leaders have pledged to curb chaotic price wars, raising hopes for supply-side reforms in industries weighed down by overcapacity and sending commodities such as lithium and coal sharply higher that month. 

This development comes as several Chinese refiners have accepted a term deal to handle copper from Chile’s Antofagasta at zero cost. Spot charges have remained below break-even since December, a trend analysts say could threaten the survival of smaller smelters without state support. 

The pressure on supply is expected to intensify after American miner Freeport McMoRan Inc. cut its output forecast in Indonesia. The company said it had halted mining at Grasberg until 2026, reducing production expectations by around 35%. Analysts note that this announcement pushed copper prices higher, delivering a significant blow to China, which is not only the largest smelter but also the biggest consumer of the red metal. 

The LME’s three-month copper contract advanced 1.02% to $10,442 per ton after reaching a 15-month peak in an earlier session as traders priced in the risk of tighter supply ahead. 

Copper’s importance to electric vehicles, power grids, and renewable technologies underscores how closely the world watches Chinese policy. Despite squeezed margins and volatile supply, the world’s largest copper producer and consumer continues to play a decisive role in shaping the market. 

Whether through regulation, consolidation, or global partnerships, China’s next steps will be closely watched by many, including entities like Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF), as the industry adapts to a new era of tighter margins and higher stakes. 

NOTE TO INVESTORS: The latest news and updates relating to Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) are available in the company’s newsroom at https://ibn.fm/ATBHF 

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