March 11, 2024

Australian miners nervous as copper ore profits collapse

Australian miners are watching nervously as China’s biggest copper smelters meet in Beijing this week to discuss a response to collapsing profits.

Copper ore processing fees – essentially the value added for smelting ore into pure copper – have fallen to their lowest level since the Great Financial Crisis of 2013.

That’s not due to an oversupply of copper ore. In fact, several unexpected mine closures have occurred around the world.

It’s because of a dramatic expansion of China’s capacity to smelt it.

And a global fall in demand as the clean energy transition stalls.

Now they’re having to cut their fees to compete with India and Indonesia, which have also increased their copper smelting capacity.

With most of China’s copper industry now state-owned, representatives of the 15 major smelters have been called to Beijing this week to discuss a co-ordinated response – including potential production cuts.

Global demand for copper has choked as consumers cut back their spending in the face of soaring living costs. But increased energy (mostly gas) costs — a central part of any smelting process — are also unsettling the equation.

As a result, an expected surge in global electric vehicle sales is yet to arise.

And an anticipated electrification of the global economy has slowed.

https://www.news.com.au/finance/business/mining/australian-miners-nervous-as-copper-ore-profits-collapse/news-story/f60b05624ecdc7645cf60e31ce0e2f16