China's Tongling to delay copper output at new plant until H2 2025, sources say
Copper giant Tongling will delay production of its new plant by six months
The 500,000 tpy copper plant is the biggest project in China in over a decade
Challenges the long-held belief of Chinese state-owned enterprises not caring about losses
Shortage of mined copper material raise doubts on the rest of smelting expansion plans
By Julian Luk and Mai Nguyen
LONDON/HANOI, Oct 10 (Reuters) -Chinese copper giant Tongling Nonferrous Metals Group will postpone production at its new plant until the second half of 2025 due to shortages of the raw materials used to make the red metal, three sources with knowledge of the matter said.
Tongling's 000630.SZ project in Anhui province is the biggest copper plant to be built in China in more than a decade. Its construction is expected to be completed in January, with capacity of 500,000 metric tons a year.
The company did not respond to inquiries from Reuters via email or telephone.
The delay has raised doubts about China's massive copper expansion pipeline over the next few years and challenges a long-held belief that state-owned smelters would keep producing copper even if they are losing money.
Without Tongling's metal from the new plant, the refined copper market surplus is likely to be narrower than forecast, which will support CMCU3 prices.
Disruptions at operations of First Quantum FM.TO and Anglo American AAL.L have intensified competition for concentrates since last year. Treatment charges (TCs), the fees a smelter earns for converting concentrate into refined metal, fell below zero in April for the first time ever.
This means smelters had to pay to turn concentrate into refined copper, instead of being paid.
Tongling has not been able to source enough concentrate to start production in January, the company told concentrate suppliers, sources said.
Copper producers typically start stockpiling concentrate three months before starting production in new plants.
When Tongling announced construction of its new flagship copper smelting and wire plant two years ago, it was aiming to surpass rivals like Jiangxi Copper 600362.SS and China Copper.
Once the Anhui plant is producing, Tongling will be the world's biggest copper smelter with a capacity to produce more than 2 million tons of copper a year.
But this could be delayed by concentrates shortages, as disruptions and countries such as Indonesia, Democratic Republic of Congo (DRC) limit exports to help local smelters.
There is still a staggering 3.2 million-ton expansion pipeline of Chinese copper smelting capacity in the next five years, analyst Craig Lang at consultancy CRU said.
If all the new capacity comes online, it would account for a 24.6% of 12.99 million tons of refined copper produced by China in 2023.
Chinese copper smelters called for a rare joint cut in production earlier this year due to losses.
But China bought 18.6 million tons of copper concentrates from January to August this year, up 3.2% year-on-year.
Reporting by Julian Luk in London and Mai Nguyen in Hanoi; Editing by Pratima Desai and David Evans
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