CU
Codelco’s El Teniente two-year setback deepens copper fears
Suspended development of the Andes Norte section at Codelco’s flagship El Teniente mine could last as long as two years, according to a union leader, compounding production challenges at the world’s largest underground copper mine and tightening an already strained global copper market.
The expansion pause follows new geological studies showing greater seismic risks than previously understood. The Chilean copper giant said the decision was made to protect workers after six months of analysis identified an emerging seismic phenomenon associated with the greater depth of the Andes Norte project.
“The available evidence is consistent with the possible existence of an emerging risk associated with the greater depth of the Andes Norte project,” the company said. “These analyses have identified the existence of an emerging seismic phenomenon with characteristics different from the risks that have historically been known and managed in the operation.”
The project is adjacent to the Andesita and Teniente 7 mining areas, where a rockburst on July 31, 2025, killed six workers and halted production across parts of El Teniente. The collapse, equivalent to a magnitude-4.2 earthquake, remains under criminal, regulatory and technical investigation.
Supply squeeze
The latest setback comes as Codelco is already struggling to restore production after output fell to a 25-year low. El Teniente’s copper production was about 27% lower year over year in the first five months of the year, while the company’s new chairman has acknowledged its goal of returning to 1.7 million tonnes of annual copper production by 2030 is no longer achievable.
The disruption adds to mounting concerns over global copper supply. Miners worldwide are pushing deeper underground as ageing operations become depleted, increasing exposure to geotechnical risks similar to those emerging at El Teniente, a century-old mine with more than 4,500 km of tunnels beneath the Andes.
At the same time, physical copper markets are tightening. CRU’s latest Copper Monitor warned of a growing risk of a near-term squeeze on the London Metal Exchange, citing low on-warrant inventories, dwindling visible Chinese stocks and heavy US imports ahead of a possible tariff decision. The report also noted that one participant now controls between 50% and 79.99% of live LME copper warrants, while nearby futures positions are concentrated among a handful of long investors.
The tightening supply outlook helped lift Comex September copper to an intraday record of $6.7045 per pound ($14,781 per tonne), surpassing the previous high set in May.
The contract later traded at $6.683 per pound, up 0.6% on the day, 7.3% over the past month and more than 50% from a year earlier. Chile, meanwhile, has just reported its weakest second-quarter copper production in almost two decades.
Copper markets are increasingly being driven by supply risks rather than demand, with Codelco’s prolonged disruption adding fresh uncertainty as inventories remain historically tight and traders continue to shift metal into the US ahead of potential import tariffs.
Copper market crunch brews as US and China compete for metal
The copper market is tightening fast, with a surge in shipments to the US and rising orders in China setting the stage for a rally that could take global benchmark prices to all-time highs.
Futures in London this week pushed past $14,000 a ton, a ceiling that had only been breached on a handful of days this year, and many traders see prices soon surging past the record $14,500-plus level reached briefly during a bout of speculative buying in China at the end of January.
This time around, the upswing has more to do with trade dislocations caused by the gravitational pull of the world’s two largest economies. While an unprecedented hoarding of copper on US shores has sped up in anticipation of a tariff decision, traders have been stepping up shipments to China to alleviate tightness there.
The flows to China come on top of an arbitrage trade that’s encouraging cargoes to the US and drove futures on New York’s Comex to a record on Wednesday. That has been going on since last year but has accelerated to the fastest pace in at least 12 years as traders await a White House decision on whether to extend duties on semi-finished copper products to raw metal.
There’s been no indication when or whether US President Donald Trump plans to announce a decision on tariffs, which have been a core policy tool in his effort to shore up industrial supply chains.
The president will be holding a meeting with mining executives on Friday in Washington, in a bid to showcase efforts to help spur critical minerals development and processing, with plans to unveil a handful of a deals and memoranda of understanding.
(By Julian Luk)
China’s copper smelting grip worries veteran metallurgist
China has built a commanding grip on global copper processing that could take the West decades and billions of dollars to challenge, veteran metallurgist Phillip Mackey has warned.
China now smelts about 60% of the world’s copper and refines a similar share after a 25-year expansion that has left Western miners shipping concentrate to the very country their governments are trying to rely on less.
Mackey, a copper smelting specialist with more than five decades in the industry and a past president of the Metallurgy and Materials Society of the CIM, said China produces about 12 million to 13 million tonnes of refined copper annually, compared with roughly 26 million tonnes worldwide, using about 45 smelters, several among the largest ever built. Chile, the world’s largest copper producer, now operates four after closing capacity.
“They’re the Saudi Arabia of copper smelting, if you like,” Mackey said on The Northern Miner Podcast. “They control the market.”
China mines only about 8% of global copper but processes well over half of it, importing concentrate from Chile, Peru and other producers to feed a smelting industry that now dictates processing economics across the sector. The imbalance underscores how Western governments remain dependent on Chinese refining even as they push to secure domestic critical mineral supply chains.
Decades-long build
Mackey said China’s dominance was built steadily beginning around 2000 by combining proven smelting technology with state-backed financing and massive industrial scale rather than technological breakthroughs. During the same period, the US reduced its copper smelting fleet from about a dozen facilities to just two as environmental permitting, soaring capital costs and decade-long construction timelines discouraged investment.
The result has been a collapse in treatment and refining charges as Chinese smelting capacity outpaced concentrate supply. Those fees, which miners pay smelters to process concentrate, have fallen to near zero and at times below zero, leaving Chinese overcapacity—not Western competition—to determine pricing. Mackey said the economics are unlikely to remain sustainable indefinitely, but they continue to reinforce China’s market power.
Slow rebuild
Mackey said rebuilding Western smelting capacity is achievable but would require long-term political commitment and substantial financial support.
“We’re mining the copper and then shipping it to China to be smelted and refined and then bringing it back,” he said. “It doesn’t make sense in the long term.”
A modern copper smelter costs several billion dollars and typically requires close to a decade to permit, build and commission. While governments have introduced critical minerals initiatives and supply-chain policies, Mackey said they have yet to match those ambitions with the funding and permitting reforms needed to support large-scale domestic smelting projects.
He compared the situation with rare earths, arguing that although copper remains abundant and widely traded, the strategic vulnerability is similar because Western countries continue exporting raw materials while importing higher-value refined products. He identified copper recycling as one area where North America and Europe retain an advantage because scrap can be processed at smaller scale and lower cost than building new smelters, although recycling alone cannot eliminate the processing gap.
Demand for copper continues to rise as electrification, renewable energy and data centres expand, making new refining capacity increasingly important. Mackey said the technology and concentrate supply already exist, but governments and industry must decide whether they are prepared to invest the time and capital needed to compete with China’s established dominance.
“It’s going to take, I think, an effort by governments and industry to move it along,” Mackey said. “There’s a lot of interest, but interest and doing are two different things.”
No comments:
Post a Comment