Aluminium and recycled copper: China's strategy to address copper scarcity

An industry group stated on November 13, 2024, that increased use of aluminium and recycled copper could assist China in managing its limited copper resources. This is because Chinese smelters face profit challenges due to constrained copper concentrate supplies.

Ge Honglin, Chairman of the China Nonferrous Metals Industry Association (CNIA), stated, "The copper industry faces many uncertainties and severe challenges ... profit of smelters, in many cases, is not from copper but from byproducts with some already suffering loss."

Global miners and smelters from the world's leading copper producers and consumers traditionally gather in Shanghai each November for the Asia Copper Week event. This gathering is crucial for negotiating copper concentrate contracts and establishing treatment charges and refining charges (TC/RCs) for the upcoming year. These charges, a significant revenue stream for smelters paid by miners, generally decrease when ore supplies are tight. According to a survey of industry participants, TC/RCs are anticipated to reach a 15-year low in 2025.

Ge stated that increasing the use of recycled copper could significantly reduce China's dependence on foreign resources, which currently exceeds 70 per cent. He projected that China's recycled copper output would grow from 2.5 million tonnes in 2024 to 2.7 million tons in 2025, reaching 3.5 million tonnes by 2030.

Ge encouraged Chinese companies to explore securing recycled copper resources from politically stable regions abroad to support this shift further. Additionally, China has eased import regulations for recycled copper and launched a state-backed recycling enterprise to help lessen its reliance on primary raw materials.

Ge advocated for mergers and the reorganisation of China's copper refining sector to boost industrial consolidation, thereby strengthening its negotiating power for purchasing concentrate.

Ge highlighted that using aluminium as a substitute for copper offers significant economic benefits, noting that copper prices are more than 3.5 times higher than those of aluminium. He also pointed out that China relies on imports for 60 per cent of the resources required for aluminium production. Additionally, Chinese companies have secured ownership of over 8 billion tonnes of foreign bauxite—amounting to more than a quarter of the global reserves.

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Information credit: Reuters