China’s copper smelters have agreed to process copper concentrate from Chilean miner Antofagasta for free, setting a new low for treatment and refining charges (TC/RCs) in the global copper business.
Four sources familiar with the situation told Reuters that the costs were set at $0 per metric ton and 0 cents per pound, a critical moment for both miners and processors.
While the agreement reduces a crucial source of revenue for smelters, one smelter and two industry analysts have described it as “better than expected,” indicating the severity of the current market imbalance.
Supply squeeze drives record-low charges
The agreement highlights the growing scarcity of copper concentrate, which is the raw material that smelters use to produce refined copper.
This tightening has been fueled by increased demand for the metal, particularly from the green energy industry, which uses copper for electric vehicles, power transmission, and renewable energy infrastructure.
The zero-fee deal is seen as a milestone, as it contrasts sharply with Antofagasta and Chinese smelters’ previously agreed-upon annual 2025 rates of $21.25 per ton and 2.125 cents per pound.
Despite the significant reduction, the bargain is better than current spot market rates, which have fallen into negative territory.
Spot TC/RCs have been reported at minus $43 per ton, implying that smelters would effectively pay miners to obtain concentrate—a reversal of usual market dynamics.
Production growth outpaces supply
The problem is being amplified by a wave of new smelting capacity, especially in China, while the addition of new concentrate supply has not materialised yet.
This incongruence has helped to depress processing fees and is one factor pressuring smelter margins.
The tightness was also compounded by some supply disruptions.
Ivanhoe Mines, for example, downgraded production guidance when seismic activity affected its operations at its Congolese copper mine.
Shortages across the globe are likely to expand.
According to consultancy Benchmark Mineral Intelligence, there will be a shortfall of 1.1 million tons of copper concentrate in 2025, escalating to 2.6 million tons in 2026.
Smelters under pressure but holding output
The deal deepens losses for Chinese smelters who are already facing pressure from declining margins. These fees are usually a big part of their revenue stream.
Nonetheless, many smelters are already balancing some of the loss by selling byproducts including gold, silver, and sulfuric acid.
Nevertheless, Chinese output of refined copper has stayed robust amid the financial pressure.
Production increased fully to 6.05 million tonnes (+8% year-on-year) during the period from January to May, the highest level on record.
China’s refined copper production is projected to continue growing, increasing by 12% year-on-year to 13.29 million tons in 2025, data from consultancy Mysteel shows.
Uncertain path forward
The adoption of zero processing costs is a watershed moment in the copper supply chain, highlighting how tight the concentrate market has become.
While the immediate consequences for smelters may be less grave than previously anticipated, the long-term repercussions are more complex.
Some industry participants believe that ongoing low or negative fees may force production cuts if byproduct revenues fall or concentrate shortages persist.
Antofagasta has not commented on the transaction. However, the company’s deal may set a precedent for future discussions in a market characterised by limited supply and fierce competition among smelters.
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