South Korean copper smelter LS MnM is evaluating a potential reduction in its copper processing capacity due to shrinking refining margins and heightened competition for copper concentrate. The company operates a refinery with an annual capacity of 680,000 metric tons but is now considering "flexible adjustments" to copper concentrate purchases based on market conditions and operational efficiency.
An LS MnM official stated that the company is "carefully considering how to reasonably adjust raw material intake" rather than maintaining production volumes by purchasing raw materials on unfavorable terms. The official added that reducing purchases might help minimize the impact on profitability from uneconomic operations.
Refining charges, which are fees paid by miners to smelters for processing ore into refined metal, have turned negative. This means smelters are effectively paying miners for concentrate. Global copper demand is projected to rise by 50% to 42 million tons a year by 2040, driven by energy transition and data centers, according to S&P Global Energy.
Despite the copper price hovering near record highs, the metal’s value to smelters has collapsed due to an unprecedented implosion in processing fees. Analysts expect China, which has expanded smelting capacity much faster than global mining output, to curb refined copper production as smelters struggle to secure concentrate and lower sulphuric acid prices further erode profitability.