Copper remains one of the world’s most important metals, serving as the backbone of electrification, renewable energy systems, electric vehicles, power grids, and industrial infrastructure. Yet while demand for copper continues to grow, the economics of processing it have become increasingly complex.
Governments across the globe are pushing for greater domestic refining capacity to strengthen supply chains. Mining companies want reliable outlets for their concentrate production, while manufacturers seek secure sources of refined copper. Building smelting capacity does not automatically guarantee profitability. The current state of the copper market demonstrates a crucial lesson: strategic processing capacity is not always profitable processing capacity.
The TC/RC Crisis Is Reshaping the Copper Smelting Industry
At the center of the industry’s challenges are Treatment and Refining Charges (TC/RCs)—the fees paid by miners and traders to smelters for converting copper concentrate into refined metal. Traditionally, smelters benefit when concentrate supply is abundant and processing capacity is limited. In such conditions, smelters have stronger negotiating power and can command higher fees.
Today, the opposite situation has emerged. Global smelting capacity, particularly in China, has expanded more rapidly than copper mine production. As a result, smelters are competing aggressively for a limited pool of concentrate, driving processing fees to historically low levels.
According to Reuters, benchmark TC/RCs fell below zero in late 2024 and reached a record low of approximately minus US$49 per tonne in January 2026, highlighting the severe imbalance between concentrate availability and processing demand. The result is a market where some smelters are effectively paying for access to raw materials rather than being paid to process them.
Jiangxi Copper and Chinese Smelters Face Margin Pressure
China remains the dominant force in global copper smelting, and companies such as Jiangxi Copper are at the center of the industry’s transformation.
Jiangxi Copper has played a key role in benchmark negotiations with Chilean mining giant Antofagasta, helping establish industry pricing for concentrate processing.
Recent agreements between the two companies reflected dramatically lower processing fees than in previous years, underscoring the growing scarcity of copper concentrate. The situation intensified further when Reuters reported that Chinese smelters negotiated a zero-dollar processing fee agreement with Antofagasta, an unprecedented outcome that highlighted the extreme pressure facing refiners. Such agreements illustrate how much bargaining power has shifted toward miners in the current market environment.
Tongling and Other Smelters Adjust Operations
The financial strain is not limited to Jiangxi Copper. Tongling Nonferrous Metals Group and other Chinese smelters have reportedly accelerated maintenance schedules and adjusted operations as shrinking margins and concentrate shortages continue to affect profitability.
When processing fees fall below sustainable levels, reducing operating rates becomes one of the few available tools to preserve financial stability. These developments demonstrate that scale alone does not guarantee profitability, even within the world’s largest copper processing market.
Gold, Silver and Sulphuric Acid Help Smelters Survive
While copper processing margins have deteriorated, many smelters have managed to offset some losses through valuable by-products.
These include:
Among these, sulphuric acid has become particularly important. According to Reuters, strong acid prices have provided significant support for Chinese smelter earnings despite deeply negative TC/RC conditions. Relying on by-product revenue carries substantial risks.
Acid prices can fluctuate, export regulations may change, and precious metal credits vary depending on concentrate composition. A smelter dependent on by-product income remains vulnerable if market conditions shift. Ultimately, sustainable profitability still requires healthy economics in the core copper business.
Mitsubishi Materials Highlights the Challenges Facing Japanese Smelters
The pressure is equally visible outside China. Mitsubishi Materials recently announced plans to cease copper concentrate processing and close related smelting operations at its Onahama plant by March 2027. According to Reuters, the company cited intense global competition and collapsing TC/RCs as key factors behind the decision.
The closure is expected to result in an impairment charge of approximately 21 billion yen, or around US$132 million. The move illustrates how difficult it has become for traditional smelting operations to compete in an environment characterized by oversupply of processing capacity and limited concentrate availability.
Japan Responds Through Consolidation and Recycling
Rather than expanding conventional smelting capacity, Japan is increasingly focusing on consolidation and recycled materials.
A significant example is the agreement involving JX Advanced Metals, Mitsubishi Materials, Mitsui Kinzoku, and Marubeni to integrate copper concentrate procurement and copper product sales within the Pan Pacific Copper structure.
The objective is clear: improve purchasing power, optimize operations, and strengthen profitability in a more challenging market environment.
At the same time, JX Advanced Metals is investing heavily in recycling infrastructure. Reuters reported that the company plans to spend approximately 7 billion yen to increase recycled-material pre-treatment capacity by 50% by fiscal 2027. This strategy supports JX’s vision of green hybrid smelting, which seeks to reduce reliance on traditional concentrate markets while increasing the use of recycled feedstock.
Codelco and Glencore Offer a Different Smelting Model
Despite current challenges, there are examples of smelting strategies built on stronger foundations. One notable case is the preliminary agreement between Codelco and Glencore to develop a new copper smelting project in Chile’s Antofagasta region.
Under the proposed structure:
- Codelco would provide up to 800,000 tonnes of copper concentrate annually
- Supply commitments would extend for at least 10 years
- Glencore would develop a smelter capable of processing approximately 1.5 million tonnes per year
This model differs from many existing projects because it prioritizes secured feedstock supply from the outset. A smelter backed by long-term concentrate agreements is significantly better positioned to withstand periods of weak processing margins than facilities that must compete aggressively for raw materials on the open market.
The Broader Lesson for Critical Minerals Processing
The challenges facing copper smelting extend beyond copper itself. Across critical minerals markets, governments are encouraging the construction of new processing facilities. Simply adding capacity does not guarantee success.
Profitable processing operations require several key ingredients:
- Secure feedstock supply
- Competitive operating costs
- Strong by-product markets
- Environmental approvals
- Reliable customer demand
- Efficient logistics infrastructure
Without these advantages, processing plants risk becoming financial liabilities rather than strategic assets.
Copper Smelting’s Future Depends on Profitability, Not Just Strategy
The experiences of Jiangxi Copper, Tongling, Antofagasta, Mitsubishi Materials, JX Advanced Metals, Pan Pacific Copper, Codelco, and Glencore collectively illustrate the changing economics of copper processing.
China demonstrates the benefits—and risks—of large-scale expansion. Japanese companies are responding through consolidation and recycling. Chile is attempting to build future processing capacity around guaranteed concentrate supply. Together, they reveal an industry undergoing profound transformation.
Copper remains one of the most strategic metals in the global economy, essential for electrification, renewable energy, and advanced manufacturing. Yet the current market serves as a powerful reminder that strategic importance alone does not create profits.
In the end, copper smelting succeeds only when processing capacity is supported by secure feedstock, competitive economics, and sustainable margins. Without those foundations, even the most strategically important facilities can struggle to survive.
