What's Happening?
JX Advanced Metals, a leading Japanese copper smelter, is set to reduce its copper production by several tens of thousands of tonnes in fiscal year 2025. This decision comes as the company faces reduced treatment and refining charges (TC/RCs) and shrinking margins due to limited concentrate supply and increased smelting capacity in China. The company's president, Yoichi Hayashi, stated that the reduction is necessary as they cannot purchase concentrates under current conditions. JX Advanced Metals plans to mitigate risks associated with concentrate procurement and smelting by reducing its smelting capacity, although the extent of this reduction has not been specified. The company exports approximately half of its refined copper, predominantly to China, where demand may decline as new domestic smelters begin operations.
Why It's Important?
The reduction in copper production by JX Advanced Metals highlights the challenges faced by Japanese copper smelters in the global market. The limited supply of concentrates and increased competition from Chinese smelters are affecting the profitability of Japanese companies. This move could impact the global copper supply chain, particularly in China, which is a major consumer of copper. Additionally, the shift in focus from mining and smelting to semiconductor materials by JX Advanced Metals indicates a strategic pivot towards more profitable sectors. This could have implications for the semiconductor industry, as the company aims to secure rare metals for chip materials, potentially influencing the supply chain dynamics in this sector.
What's Next?
JX Advanced Metals is actively seeking new projects to secure rare metals for semiconductor materials, with future investments expected to be smaller than previous ventures. The company has announced its intention to acquire a stake in the Copi mineral sands project in Australia. Negotiations between Japanese smelters and global miners have ended without a TC/RC agreement, prompting companies to forgo contracted term supplies. However, some miners are open to negotiating different terms with Japanese companies compared to the Chinese benchmark deals, which could support the world’s fourth-largest smelting sector.
Beyond the Headlines
The strategic shift by JX Advanced Metals from traditional copper smelting to semiconductor materials reflects broader industry trends towards diversification and adaptation to changing market conditions. This move could lead to increased investment in technology and innovation within the semiconductor sector, potentially driving advancements in chip manufacturing and related industries. The focus on recycling materials and rare metals recovery also highlights the growing importance of sustainable practices in the mining and smelting industries.
