Smelters are Struggling Even as Copper Prices Soar

Refined copper has enjoyed record prices, but the facilities that smelt the concentrate are struggling to stay afloat because processing fees have tanked to extremely low levels. Processors now have to depend on the by-products of the refining process in order to keep their doors open.

Previously, smelters obtained revenue from the processing fees they charged, and then augmented that revenue with the income they got from other products that were contained within the copper they processed. Those other products include silver, sulfuric acid and gold. These byproducts are now the financial lifeline for smelters after processing fees collapsed.

How did matters degenerate to this level? The short answer is China. The East Asia country expanded its smelting capacity so rapidly that facilities had to compete for the available concentrate from mining firms around the world.

As that competition for product ramped up, smelters were sucked into a race to the bottom by slashing processing fees in order to lay their hands on the available concentrate supplies. Smelting capacity grew at a much faster rate than the rate at which copper mining was increasing.

To understand how steeply processing fees have tanked, one only has to look at recent figures. In 2024, refining and processing a ton of copper concentrate cost $80. In 2025, that amount dropped to $21.25, and now this year, smelters are being paid zero dollars for each ton of copper concentrate they refine and process.

You may be wondering, how could this happen, and how are smelters surviving? Like we mentioned earlier, competition among smelters drove them to keep reducing smelting fees just so copper concentrate can continue flowing into their facilities. They had a lifeline in the form of by-products of the refining process that they could sell.

However, the situation has become so bad that smelters are having to pay mining firms in order to get their hands on copper concentrate to process!

Questions are being asked about the sustainability of the pricing model being used, and there has been talk of China curbing its processing capacity in order to shore up processing fees. However, this talk hasn’t resulted in concrete results because smelting capacity expanded by 7.4% annualized in January to April this year, against a global mine production growth of just 1%.

Larger processing facilities aren’t feeling the pinch as much because their modern equipment can extract more by-products from the concentrate they process, but smaller facilities with older equipment are barely surviving.

These struggling processors are probably desperately hoping that exploration firms like Collective Mining Ltd. (NYSE American: CNL) (TSX: CNL) further accelerate their operations so that proven reserves can proceed to the development and production phase to increase available concentrate for processing.

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