China Imposes Stricter Rules on New Copper Smelters

China has introduced stricter requirements for establishing new copper smelters in an effort to curb excessive capacity expansion in the world’s leading producer of refined copper. Under a new 2025-2027 development plan issued by 11 government ministries, companies seeking to build smelting facilities must control sufficient mine supply, either through direct ownership or equity stakes. This criterion is expected to be met by only a limited number of major Chinese firms.

The copper sector has been facing intense competition for raw materials as global mining operations struggle with production disruptions, declining ore grades, and rising exploration costs. Spot processing fees have dropped below zero, leading to industry-wide losses and raising concerns about potential output cuts at Chinese smelters.

The China Nonferrous Metals Industry Association previously called for restrictions on new smelters, emphasizing the need for regulation similar to that seen in the steel and aluminum industries. Currently, approximately 85% of the copper concentrate used in Chinese smelters is imported. In 2023, China produced 12 million tons of refined copper, while domestic mined output stood at 1.7 million tons, representing only 4.1% of global reserves, according to the U.S. Geological Survey.

To strengthen supply security, the government aims to increase domestic copper mine resources by 5% to 10% over the next three years. The plan also encourages smelters to enter long-term purchase agreements with global miners, increase imports of copper blister and anode, and boost scrap imports.