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| LME Week 2025 |
The importance of refining and smelting over mining took center stage at the LME Week 2025 when Trafigura's CEO, Richard Holtum, emphasized that "smelting is critical, not mining." His remarks have stirred significant debate within the industry, highlighting the growing strategic importance of smelting and refining infrastructure in a globalized economy.
The Strategic Importance of Smelting and Refining
Richard Holtum's statement during the LME seminar underlined the critical role that refining and smelting play in the global metal supply chain. While raw materials such as ores can be sourced from various locations around the world, it is the smelting capacity that creates strategic dependencies. Holtum explained that smelting is a process that transforms ores into usable metals, which are essential for a wide range of industries, from defense to electronics. Without adequate refining infrastructure, countries become vulnerable to supply disruptions.
Holtum used the example of specialty metals, noting that certain metals like antimony, germanium, and gallium depend on specific smelting processes. "You can’t have antimony without a lead smelter," he stated, emphasizing the interdependency between mining and refining. This argument resonated with attendees, as it pointed to a global challenge: countries without the necessary refining capabilities may find themselves at the mercy of others who control these facilities.
Government Support and Regional Smelting Developments
Australia was highlighted as a prime example of proactive government support for domestic smelting operations. Holtum pointed to the successful antimony production project in Tasmania, supported by the Australian government, as an instance where a small investment led to the revival of an entire metal production chain in the Western world. The pilot project, led by Nyrstar, is expected to ramp up in 2026, showcasing how targeted investments can secure vital supply chains.
Holtum praised the Australian government for being one of the most forward-leaning in supporting smelting infrastructure. However, he noted that other regions, such as Europe, are lagging behind due to high energy costs and carbon emissions concerns. Despite challenges, Holtum believes that a growing recognition of smelting’s strategic importance will drive more investments in refining facilities globally.
Challenges in the Copper Industry: A Global Perspective
The copper sector, particularly in the U.S., has faced significant challenges in smelting. Recent disruptions, including the downturn in copper treatment and refining charges (TC/RCs), have made it increasingly difficult for smelters to operate profitably. At the same time, high energy costs and operational challenges, such as the issues faced by Freeport's Grasberg mine in Indonesia, have intensified the pressure on global smelting capacity.
In a broader context, Trafigura’s CEO pointed out that despite the buzz surrounding emerging demand drivers like AI and defense spending, traditional copper applications—such as those in construction, infrastructure, and consumer goods—remain the dominant force in driving demand. As a result, smelting infrastructure for copper continues to be a vital part of the global supply chain.
ScrapInsight Commentary
The focus on refining and smelting capacity is a critical market insight, underscoring the importance of domestic processing in securing metal supply chains. With copper refining charges at historical lows and geopolitical risks affecting supply chains, countries are likely to increase investments in smelting infrastructure to mitigate future risks. This shift could have significant implications for global metal prices and recycling markets.
