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Zijin Mining’s copper blending expansion: China’s growing dominance on the global stage

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China’s leading mining company, Zijin Mining Group, is poised to launch its latest copper concentrate blending facilities in Dongfang city, Hainan province, by the end of June, according to insiders cited by S&P Global Commodity Insights. This strategic initiative is expected to substantially bolster China’s copper concentrates blending capabilities, underscoring the country’s growing impact in the global copper market.

Expanding China’s Blending Capacities

The forthcoming blending facilities in Hainan, designed to process 600,000 metric tons annually, represent a significant expansion of China’s blending infrastructure in bonded areas. Since gaining approval in November 2020 to establish blending facilities in Fangchenggang and Yantai cities, China has steadily increased its capacity, now constituting approximately half of the world’s total copper blending output. Bonded areas, designated by China’s customs authorities, provide tax deferral benefits on imported goods, offering importers more efficient tax payment management.

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Zijin Mining’s entry into this sector not only enriches its portfolio but also aligns with China’s broader aspirations to reinforce its standing in the global copper market. The company’s substantial production from copper mines in Julong (Tibet), Timok (Serbia), and Kamoa (Congo) highlights its commitment to meeting the rising demand for copper, a crucial resource in the electrification and renewable energy sectors.

Challenges in Copper Concentrate Blending

Despite the opportunities arising from the expansion of blending facilities, the industry faces several challenges. The intricate requirements set by China’s customs authorities for importing copper concentrates, particularly concerning impurity content, necessitate blending complex copper concentrates with those surpassing standards for clean copper concentrate. This blending process is vital for selling to smelters willing to compromise on quality, emphasizing the pivotal role of blending facilities in ensuring the availability of usable copper concentrates.

However, the journey is not without obstacles. The narrowing spread of treatment and refining charges between clean and blended copper concentrates has dampened trading companies’ enthusiasm for direct blending. They prefer selling complex and clean concentrates to smelters separately, influenced by high financing and freight costs, difficulties in sourcing clean copper concentrates, and a shortage of suitable blending materials. These factors collectively impede blenders’ profit margins, with Indonesia’s looming copper concentrate export ban exacerbating the situation by reducing the availability of high fluorine copper concentrates essential for blending.

Future Prospects and Market Dynamics

The evolving landscape of the copper concentrate blending market, combined with Zijin Mining’s strategic establishment of blending facilities in Hainan, paints a nuanced picture of supply and demand dynamics. As traders navigate the complexities of sourcing and blending copper concentrates, attention shifts to smelters, who, through blending operations, can optimize costs and address the urgent demand for copper. This shift underscores a broader trend towards localization and efficiency in the copper supply chain, potentially impacting global trade flows and pricing strategies.

The expected increase in China’s approved copper blending capacity to 2.75 million metric tons this year reflects the country’s proactive stance in gaining a competitive edge in the copper market. This development, coupled with strategic insights from market sources and analysis provided by S&P Global Commodity Insights, underscores the significance of Zijin Mining’s new blending facilities in shaping the future of the global copper industry.

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