Smelting Capacity Emerges as a Key Supply Chain Challenge

The Lumwana Super Pit Expansion in Zambia remains on schedule, with first copper production targeted for the end of Q1 2028, keeping one of the country’s largest copper growth projects on its planned development timeline. According to the latest quarterly update from Barrick Mining Corporation, construction advanced during Q2 2026, with the second lift of the mill walls and roller slab completed and civil works for the primary crusher progressing. Civil construction also commenced on the transfer towers for the overland conveyor system. Most major long-lead equipment is now on site, including the mill shells and trunnions, primary crusher and tailings thickener. The expansion is expected to substantially increase Lumwana’s processing capacity and lift average annual copper production to around 240,000 tonnes once completed. The additional output would strengthen Lumwana’s role in Zambia’s medium-term copper supply growth and provide a significant contribution toward the country’s broader production expansion ambitions. From a copper supply perspective, maintaining the Q1 2028 first-production target improves visibility over Zambia’s medium-term mine supply pipeline. The project is particularly significant as Zambia seeks to translate a growing pipeline of mine expansions and new developments into sustained increases in national copper output. Continued progress at Lumwana will therefore be an important indicator of Zambia’s ability to deliver the next wave of additional mined copper supply from 2028 onward.

According to foreign media reports, India's state-owned Hindustan Copper is exploring plans to supply copper concentrate sourced from Chilean state miner Codelco to domestic producers Hindalco Industries and Adani, as India seeks to secure raw materials for its expanding copper industry. Hindustan Copper, Coal India and NTPC Mining are reportedly assessing opportunities involving four copper mining blocks held by Codelco in Chile. Hindustan Copper signed a preliminary cooperation agreement with Codelco in 2025, followed by a non-disclosure agreement in May 2026, with due diligence now underway. The move comes against a widening gap between India's copper consumption and domestic supply. India currently produces around 573,000 mt of refined copper annually, while domestic demand is estimated at approximately 1.8 million mt. Government estimates suggest that the country could eventually depend on imports for 91%-97% of its copper concentrate requirements by 2047. India has been expanding domestic copper smelting and refining capacity as electricity infrastructure, renewable energy, manufacturing and transport increase demand for the metal. However, expanding processing capacity without a corresponding increase in domestic mine supply increases the country's exposure to the international concentrate market. Securing access to Chilean resources could therefore provide Indian smelters with greater long-term supply security while reducing reliance on spot concentrate purchases. Market Impact: India's push into overseas copper resources could introduce additional competition for internationally traded concentrate at a time when mine supply growth is struggling to keep pace with expanding global smelting capacity. As India builds out its copper processing industry, its growing requirement for imported feedstock could increasingly influence Asian concentrate trade flows and competition for long-term supply contracts.

【SMM Copper Scrap Flash】 The price difference between primary metal and scrap has historically been the "thermometer" for the secondary copper industry, and its widening typically effectively boosts copper scrap consumption. According to SMM, after end-June 2026, copper prices rose, and the price spread between primary metal and scrap expanded from less than 1,000 yuan/mt to around 4,400 yuan/mt, at a historically relatively high level. However, copper scrap consumption did not show a synchronized strong uptrend, and the indicator showed a "divergence," mainly disrupted by tax compliance factors: First, after the implementation of reverse invoicing, the circulation of uninvoiced copper scrap was hindered. The number of compliant individual accounts is limited, and the additional compliance cost is difficult to pass on downstream. Scrap utilization enterprises can only pass the pressure upstream by lowering the purchase price of copper scrap. Second, the supply of domestically produced, tax-inclusive copper scrap is scarce, and enterprises scramble for input VAT invoices. The invoice tax rate rose from 10.5% to 11.5%-12%, while the finished secondary copper rod sector faced fierce competition and could not raise prices, prompting enterprises to further depress raw material purchase prices. In summary, the rapid expansion of the price difference between primary metal and scrap in this round was not driven by demand; rather, it resulted from tax costs being passed upstream along the industry chain to the copper scrap side.