The Clock Starts Ticking on US Copper Production as 50% Tariff Looms

A former commercial executive at Enami, Pedro Pablo Lavin, posits that America would need a minimum of ten years to achieve copper self-sufficiency through domestic production and processing. This sentiment is shared by Jefferies analysts, who argue that because mines take a while to develop, it may not be possible to achieve self-sufficiency in under a decade. 

This means that the U.S. will continue to rely on the red metal’s imports even after the 50% import tariff goes into effect on August 1st. 

Currently, America consumes roughly 1.6 million tons of copper annually, with about 1.1 million tons coming from domestic mines. This means that the country still needs about 500,000 tons of imported copper annually to meet its needs. 

It is expected that the Section 232 tariffs may intensify price pressures without significantly decreasing dependency on foreign supply in the short-term, especially without increased investment in smelting, mining and refining infrastructure. 

Some analysts are convinced that America’s announcement to impose tariffs may have been a reflex reaction to the price of copper surpassing the $10,000 a ton mark on the LME at the start of this month. Since the tariff announcement, the Chicago Mercantile Exchange and the London Metal Exchange have observed notable shifts. On July 25th, the red metal’s price on the COMEX hit $5.61 per pound, which was slightly higher than the LME’s price of $4.43 per pound. 

Since the announcement, U.S. importers have also been accumulating inventory, with roughly 600,000 tons of cathode being stored ahead of next month’s deadline. 

Lavin argues that this stockpile may cause imports to reduce significantly between August and December and in turn, lead to the decline of the metal’s price on the COMEX. He adds that the increased prices of local copper may provide an incentive to develop America’s copper recycling capacity and reprocess scrap produced in the country instead of exporting it. 

2024 saw America’s copper scrap exports exceed one million short tons, representing an increase of about 9% from 2023’s figures. Of the total exported, about 41% of this scrap was imported by China, which is the biggest importer of the red metal’s scrap.  

However, Lavin notes that time is needed for this sector to develop so its progress may only be noticeable in the long-term. At the moment, secondary smelters in operation are working at roughly 21% of their capacity. 

New recycling plants are becoming operational though, including Exurban’s plant in Indiana and Aurubis’ smelter in Georgia, so there just might be hope. 

For companies like Torr Metals Inc. (TSX.V: TMET) currently conducting copper exploration activities, the import tariffs imposed by Trump could present some headwinds that may have to be navigated once the firms move their properties to the production phase. 

NOTE TO INVESTORS: The latest news and updates relating to Torr Metals Inc. (TSX.V: TMET) are available in the company’s newsroom at https://ibn.fm/TMET 

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