South Korean copper smelter LS MnM is reviewing a potential reduction in output as shrinking refining margins and intensifying competition for copper concentrate pressure profitability, it said on Monday.
The company, which operates a refinery with annual capacity of 680,000 metric tons, said it was considering “flexible adjustments” to copper concentrate purchases depending on market conditions and operational efficiency.
“Rather than maintaining production volumes by purchasing raw materials on unfavourable terms, we are carefully considering how to reasonably adjust raw material intake,” the company said.
“Depending on purchase terms, reducing the purchase might help minimise the impact on profitability from uneconomic operations.”
Refining charges — fees typically paid by miners to smelters to process ore into refined metal — have turned negative, meaning smelters are effectively paying miners for concentrate, an LS MnM official said.
Global copper demand is projected to rise by 50% to 42 million tons a year by 2040, driven by energy transition and data centres, S&P Global Energy predicts.
While the copper price hovers near record highs, the metal’s value to smelters has collapsed after an unprecedented implosion in processing fees.
China, which has expanded smelting capacity much faster than global mining output, is expected to curb refined copper production as smelters struggle to secure concentrate and lower sulphuric acid prices further erode profitability, analysts have said.
(Reporting by Heejin Kim; Editing by David Goodman)
