Discussions were held with Jiangxi Copper, Tongling Nonferrous and Yunnan Copper last month proposing a series of changes to current requirements in a bid to combat pollution, a source said.
The focal point of discussions was to lower the current 0.5% limit on arsenic contained in imported copper concentrates to 0.4%, the sources said.
All three smelters voiced strong opposition to the proposals, which are considered a preliminary consultation because customs has not proposed any implementation timeframe, Fastmarkets understands.
Under the current rules introduced in April 2006, shipments of metal concentrate into China must undergo inspection by the China Inspection and Quarantine Services (CIQ) and may not contain levels of more than 0.5% arsenic, 6% lead, 0.1% fluorine, 0.05% cadmium and 0.01% mercury.
Under the proposed thresholds, the maximum content for imports would be 0.4% arsenic, 4.7% lead, 0.06% fluorine, 0.03% cadmium and 0.002% of mercury.
On top of these, customs have added two new elements. The combined content of antimony and bismuth cannot be higher than 0.2%, while thallium content is capped at 1.2g per tonne.
“If customs press ahead with these, plenty of mid-sized Chinese copper smelters will not survive,” a second informed source said.
Customs has so far only approached these three smelters, which have a combined copper production capacity of 4.38 million tonnes per year. The three smelters process a combined 17.52 million tonnes of copper concentrates every year.
Complex concentrate output on the rise
This sharpening of import restrictions clashes with a global trend of copper mines steadily producing more and more high-impurity or “dirty” concentrates that predominantly feature higher arsenic content.
A study from MineSpans by McKinsey estimates that high-arsenic concentrate now constitutes 8% of total global supply. This will increase to 9% as a base case by 2028 but could potentially grow up to 13% by that time, the study said.
The implementation of stricter import standards to China, home to half of the world’s copper smelting capacity, could mean that producers of complex concentrate will have a tougher time marketing their materials.
This is particularly relevant to Yunnan Copper, whose operator Chinalco owns the Toromocho mine in Peru, at times a high-arsenic copper concentrates producer.
“When we look at some popular brands among Chinese smelters, the arsenic content has been rising in recent years,” a third source said.
Meanwhile, the world's top copper trader, Glencore, is in the process of building a new concentrates blending plant in Taichung, Taiwan, to take advantage of the increased blending business.
Challenges to source clean feed for blending
Blending is the process of taking different cargoes of concentrates and mixing them to produce an optimal result. In the case of copper concentrates, high-arsenic “dirty” material is blended with “clean” or “super clean” concentrates that have lower impurities, ending up with material that meet import restrictions or be acceptable to smelters.
But doing this often requires several cargoes of clean material to blend down particularly dirty cargoes.
Under the newly proposed standards, if higher volumes of concentrate are deemed complex and prohibited from entering China, “clean” and “super clean” materials required for blending would be priced at a greater premium or at lower treatment and refining charges (TC/RCs) in the market.
Spot processing fees of standard copper concentrates, tracked by Fastmarkets copper concentrates TC/RC index, are currently at $51.2 per tonne/ 5.12 cents per lb as of Friday July 26. It is already at its lowest level since the index was launched in 2013.
"For smelters and even the copper industry it would further exacerbate an already tightening market," the third source added.
"It's far too early to say whether the customs suggestion will be eventually implemented or not," a China-based source with knowledge of the talks said.
This is the latest government attempt to reduce pollution arising from processing imported copper raw materials.
Since the beginning of this year, Beijing has imposed a total import ban of category 7 copper scrap which requires local dismantling. This July, a quota system was launched to restrict metal scrap imports allowed for the second half of the year.
Additional reporting by Archie Hunter in London
China's customs agency has held discussions with the country's major copper smelters with the aim of creating stricter limits on impurities contained in imported copper concentrates, four sources with direct knowledge of the matter told Fastmarkets.