Smelters Pay Up as Copper Mines Run Dry

BHP staked 2,713 new federal mining claims in May, in Alaska's Kenai Peninsula and Matanuska-Susitna counties. That compares with 6,758 new claims recorded across all stakers that month, according to Stake & Paper's ClaimWatch data. The next company on the list, Intrepid Potash-Wendover, filed 614.

Read that against the copper market and it stops looking like a curiosity. Smelters are now paying miners for the right to process ore, and the miners are staking new ground.

What the claims show, and what they don't

The BLM files show where BHP staked, not what it is hunting. Each of the two Alaska counties had a single staker. The nearest mapped prospects, about 17 kilometers from the Kenai Peninsula claims, list copper, lead and silver. They are early-stage and polymetallic, so treat them as a hint, not a copper thesis.

Smaller names point more directly at the metal. Celatus Copper USA filed 290 claims across Cochise County, Arizona, and Hidalgo and Luna counties, New Mexico. Cardero Copper filed 176 in Yavapai County, Arizona.

Two caveats apply. The BLM records claims about four months late, so the series ends with May, and it says nothing about what has happened since. And a claim is a right to look, not a mine. The distance between the two is measured in years, which is why the pressure shows up elsewhere first.

Where the pressure shows

It shows up in what smelters pay for feedstock. Kitco, carrying a Reuters report, said Antofagasta was paid more than $300 a metric ton to have its concentrate turned into metal in recent tenders, two sources told Reuters, "underscoring acute supply shortages as contract talks for 2027 begin." In one tender, the Chilean miner secured a negative treatment charge of $310 a ton on 10,000 tons from its Centinela mine for November shipment. In another, it sold 40,000 tons from Los Pelambres spread over next year in the minus $330s. One source called the results a record for Antofagasta. Teck sold Highland Valley material in the minus $370s a few weeks ago, other sources told Reuters. Antofagasta declined to comment, and Teck did not respond.

A negative charge means the smelter pays the miner. Reuters reported that charges first turned negative at the start of last year, so this is a deepening squeeze, not a sudden break. The Fastmarkets concentrate index for Asia Pacific stood at minus $272.20 a tonne on October 9, against minus $69.70 at the start of the year, according to The Chokepoint, an independent newsletter citing Fastmarkets.

Capacity is not the problem. Reuters says China's smelting capacity, estimated at 13 million to 14 million tons this year, has grown more than 70% in a decade, and the country refines over half the world's copper. Data from the International Copper Study Group, cited by The Chokepoint, shows the mismatch. From January to July, world smelter output rose 5.9 percent year on year, while mine output fell 1 percent and Chile's fell 7 percent. Smelters are growing into a shrinking supply of ore.

Why the disruptions keep coming

The shortages began with the late-2023 shutdown of First Quantum's Cobre Panama mine. Reuters says they most recently include the accident at Codelco's El Teniente, which left two workers dead. GEM Mining Consulting's Production-at-Risk Index, reported by MINING.COM, ranks El Teniente the most exposed of 14 major copper operations, with 9% of production at risk. Los Pelambres follows at 8% and Escondida at 7.5%.

Escondida at least stayed open. BHP and its supervisors' union struck a deal that avoided a strike at the mine, Reuters reported via Mining Weekly. The union said 64% of members accepted and 35% refused, and BHP said the contract runs for 36 months. Antofagasta's Centinela was less fortunate, with an almost week-long strike, its first, according to MINING.COM.

Panmure Liberum puts reported disruptions in 2025-26, including Grasberg and Kamoa-Kakula, at 350,000 to 400,000 tonnes of contained copper a year, which the bank says is only 30% to 50% of published disruption allowances. The bank also cautions against reading everything as physical scarcity. Panmure Liberum said in a note that "the dominant price driver is probably speculative/financial," as MINING.COM reported.

The price data fits both readings. The Chokepoint reports that LME three-month copper traded at $14,480 a tonne in official trading on Friday, about 3 percent below September's intraday record of $14,875. Equities are less buoyant. The copper-miners ETF COPX ended the session at $79.98 on Friday, declining 1.05%. Its monthly closes were $92.86 in August and $79.98 so far in October, according to market data.

Who survives negative charges

Chinese smelters keep buying at negative TC/RCs on the spot market. Reuters says they break even because copper trades near record highs and they sell sulphuric acid and gold as byproducts. Each ton of copper smelted yields 3.5 t to 4 t of acid. Two analysts told Reuters that every 100-yuan net profit from a ton of acid could offset around a $10 per-ton loss on processing fees.

That cushion is thinner abroad. Mining Weekly, carrying Reuters, reported that China's ban on acid exports from May was softening prices in some regions. Smelters outside China have fewer ways to cover the gap. Mitsubishi Materials said in March it will stop processing concentrate at its Onahama smelter in Japan by the end of March 2027, citing overseas competition and collapsing charges, per The Chokepoint. If the 2027 benchmark settles below zero, the newsletter writes, smelters outside China will lean harder still on acid credits and product premiums.

The talks

Antofagasta is preparing to open 2027 talks with smelters on the sidelines of LME Week, which starts Monday in London, Reuters reports. The first settlement between a major miner and a Chinese smelter traditionally sets the benchmark for annual contracts. Beijing is already pressing on the same pipe. China's market regulator has asked Anglo American to commit to a steady flow of concentrate to Chinese smelters as a condition for clearing the Teck merger, Reuters reported on October 2, via MINING.COM.

BHP's 2,713 Alaska claims will not produce a pound of concentrate before those talks conclude. But they show who expects to hold the leverage when the next round comes due.