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Speaking on a panel at the Financial Times Metals and Mining conference titled “Processing and smelting – Can the industry survive outside of China?”, Snowden said smelters have navigated the negative treatment charge and refining charge (TC/RC) environment relatively well in 2025, with strong results supported by byproduct credits including sulphuric acid, gold and silver.
“Although we have been [in] a very negative TC/RC environment in 2025, I think actually smelters have navigated that environment relatively well,” Snowden said. “We’re not yet at a point of peak pain that’s driving that adjustment. Refined production is still growing and so that tells you that we’re probably not at a margin point that is generating demand destruction.”
The concentrate market is expected to remain very tight next year, with another deficit of nearly half a million tonnes anticipated, similar to 2025 levels, according to Snowden.
“Absolutely the concentrate market is going to remain very tight [in 2026]. We’re expecting another deficit of nearly half a million tonnes, very similar to this year and it’s a market that really since you lost Cobre Panama at the back end of 2023, has been on a pretty significant tightening phase,” he said.
As a result, concentrate inventories have been declining and prices are reflecting an increasing scarcity premium, Snowden added.
Julian Kettle, vice chairman of metals and mining at Wood Mackenzie, noted that current treatment charges are “not sustainable” and “not healthy for the industry,” even though low TC/RCs benefit miners in the short term.
Fastmarkets assessed the weekly copper concentrates TC index, cif Asia Pacific – the mid-point between smelter and trader buying levels – at $(66.60) per tonne on October 10. This was down by $1.20 per tonne from $(65.40) per tonne on October 3 and marked the eighth consecutive week of decline.
One factor preventing faster market adjustment is China’s strategic priority to maintain secure copper supply, particularly as the United States pulls extraordinary amounts of metal amid tariff concerns, Snowden said.
“From a Chinese perspective, that means there’s going to be less metal available for them to import. As a result, [there is] more pressure on them to produce copper domestically,” he said. “We probably should not expect the Chinese to really be the first to cut in that setting, [given] it’s a strategic priority for China to have as much copper as they need.”
China operates approximately 60-65 copper smelters, compared with around 15 in Europe and just three in North America, according to Kettle.
The challenging conditions come as Western smelting capacity faces increasing pressure, with recent examples including the permanent closure of one of Alcoa’s alumina refineries and Glencore announcing a rescue package for one of its copper smelting and refining facilities in Australia, panelists noted.
Toralf Haag, chief executive of Aurubis, said the company must work on competitiveness through various strategies, including processing more complex materials with high arsenic content and leveraging long-term relationships with mine suppliers.
“We have increased competition from China. Half of the copper demand is going to China. They’re building up their smelting capacity and of course, it puts a lot of pressure on the TC/RCs for us,” Haag said. “We have to work on our competitiveness.”
Aurubis is also expanding its recycling operations, which currently represent 45% of its production and recently built its first recycling smelter in the US, Haag said.
The company is working to reduce its dependence on TC/RCs for overall profitability by expanding its multi-metal portfolio beyond copper to include gold, silver, tin, tellurium and other metals, he added.
Guido Janssen, chief executive of Nyrstar, said zinc and lead smelters are increasingly focusing on valorizing critical metals from their operations as a path to competitiveness and regional autonomy.
“What we see happening is a kind of reverse dumping, which means that China is buying a lot of concentrates and valorizing a lot of critical metals from those concentrates,” Janssen said. “So, in order to be competitive, it means that we have to invest in our smelters to make sure that we also can produce those critical metals and can create a certain autonomy in Australia and Europe and in the US.”
Zinc and lead can serve as “carrier metals” for critical materials including antimony, germanium, gallium and tellurium, Janssen explained. Antimony, for example, is used in defense applications, including bullets.
“What’s clearly understood is that you need processing. It’s not only about mining, you also need processing present in the region to be able to valorize your critical metals,” Janssen said. “If you lose processing, you’re basically mining to produce it somewhere else and then you get dependent on that production.”
But Janssen said the transition to critical metals production requires temporary government support to maintain competitiveness, as well as longer-term protection mechanisms.
“When you produce those critical metals, you need some kind of support that protects you from market disruption,” he said. “These critical metals are very low tonnages. If for some reason in the market there will be a dump of those metals, you need some kind of protection, you need to have a strategic vision as a region to do some stockpiling.”
In Australia, Nyrstar’s lead smelter has received temporary support from the government to help with the transition to producing critical metals, Janssen said.
“When you can produce those critical metals, you’ve got a sustainable business, but you have to go through that transition,” he said.
Beyond critical metals, Western smelters face structural disadvantages including higher energy costs, Haag said. Aurubis pays approximately one-third in the US for energy compared with what it pays in Germany, he noted.
“Most importantly, of course, the work on the energy prices [in Europe], but this is going very slow. Then on permits, which is also going very slow,” Haag said. “I think we also have to be in Europe more entrepreneurial when it comes to new projects.”
Haag described the contrast in investment climate between the US and Europe: “If you invest in Germany, [people ask] ‘what does it do to our environment?’ [In the US] they say, ‘Oh, you create wealth, you create jobs.’”
The German government has been supportive in one area – financing – with Aurubis bringing German financing to projects such as an agreement signed with Troilus Gold Corp in Canada, Haag said.
Kettle warned against over-reliance on byproducts as a long-term solution, noting that gold prices will not remain above $4,000 per oz indefinitely. The sulphuric acid market also faces potential disruption, with approximately 1.5-1.6 million tonnes of demand at risk from the potential loss of oxide leaching operations in Chile, he said.
Looking ahead, Snowden suggested Chinese policy could eventually provide relief through measures aimed at restraining capacity additions, similar to policies that reshaped the aluminium sector over the past decade.
“Aluminum used to be the most grotesquely oversupplied metals market from a supply perspective. You’d have to go back 10 years ago, but Chinese policy has changed that market in terms of restraint in China,” Snowden said.
But he cautioned this would be a longer-term development rather than an immediate solution.
“When you look forward beyond the next 12 months, I do not think it’s going to be something that provides a short-term shock to the market when we think about the next few quarters, but when you think about the next five years, I do think that policy focus is going to be a factor that really starts to reshape the industry,” Snowden said.
Kettle expressed pessimism about Western capacity additions in the near term, noting the lack of progress during the first Trump administration.
“Trump version 1, [there was talk of] reindustrialization and we saw [nothing] – no smelters, no steel plants, no copper smelters,” Kettle said. “I’m pessimistic we will make much progress in the next three to five years, but beyond that, we have to hope.”
When asked whether China would be more or less dominant in smelting in five years, Kettle responded: “At least as dominant.”