He employed the use of import tariffs and other duties throughout his first term as president, including on aluminium and steel. And for his second term, Trump is particularly focused on upping the ante on China and has said he plans to introduce new duties “from day one” of taking office on January 20.

To that end, market participants expect the president-elect to come out of the gate all guns blazing – largely because Trump has already outlined his plans to impose a 25% tax on all products entering the United States from Canada and Mexico, with an additional 10% tariff going on to goods from China, taking those tariffs up to 60%.

Tariffs will stay in place, he wrote on his own social media platform Truth Social, “until the inflow of drugs and illegal immigration into the United States comes to an end.”

He has also talked about a 10% universal tariff on all goods imported into the US, which he said would raise billions to reduce the deficit and allow the government to pay for social and industrial programs.

Whether all these tariffs materialize is another matter, however.

From his statements so far, Trump plans to use some of the proposed tariffs as a bargaining tool to secure leverage on specific measures. That means if Trump secures the concessions he wants, the tariffs might be avoided.

What is not yet clear is whether he will embrace slightly softer “carrot” tactics or double-down on a less conciliatory “stick” approach.

If the incoming US Treasury secretary, Scott Bessent, has anything to do with it, the approach will be more moderate – Bessent has called for tariffs to be “gradual,” and has described the 60% China tariff threat as a “maximalist negotiating position.”

Economists warn that tariffs are also inflationary, would lead to the appreciation of the US dollar, thereby raising the prospect of higher interest rates.

Nonetheless, the consensus is that, whatever else happens, the future Trump administration will implement a 60% tariff against China. Pundits are also broadly betting that the floated 10% universal tariff will come into effect as part of a plan to slash US debt and generate revenues to be used elsewhere.

In theory, a 10% tariff on the $3.1 trillion of goods imported into the United States in 2023 would raise $310 billion. In practise, a universal tariff is likely to have exemptions, such as services and oil & gas, and would reduce import volumes – meaning the overall revenue generated while still impressive, will almost certainly be lower.

Looking to history, the Nixon shock in 1971 saw a 10% surcharge applied to half of all goods, while in 1930, the Smoot Hawley Tariff Act applied to just over half of all goods. Observers have said that a universal tariff is likely to be of a similar order of magnitude, although it’s important to note that both political decisions were key factors leading to subsequent severe economic recessions.

Commodities in focus

Until Trump moves into the White House and action is taken, the “not knowing” is wreaking havoc in the commodity markets, with market participants working to lock-in terms for supply contracts despite have no certainty about the economics behind their deals.

Of course, tariffs aren’t new to the commodities markets and outgoing president Joe Biden kept the Trump-era tariffs in place for China and imposed some more of his own – including a 100% tax on imports of Chinese electric vehicles (EVs) and a 25% tax on lithium-ion batteries, along with steel and aluminium products.

The US steel market has broadly cheered the prospect of additional tariffs in 2025, having benefited heavily from protectionist measures in Trump’s first term in office.

Steel market participants in Mexico and Canada, however, appear less impressed, and leaders of both countries have already had conversations with Trump in an apparent effort to head off tariffs.

Trump has said that he plans to notify Mexico and Canada of his intention to use the six-year renegotiating provision of the United States-Mexico-Canada Agreement (USMCA) to strike better deals – notably with regard to the automotive sector.

For aluminium market participants, it’s déjà vu – all over again.

The US Aluminum Association has already emphasized its view that tariff-free access to the imported Canadian aluminium it so heavily relies on, must be maintained.

It’s an often-overlooked fact that three out of every four cars sold in America contains aluminium from Canada, while one out of every three car and truck wheels manufactured in the US contains aluminium produced in Canada by Rio Tinto. Parts cross the border sometimes more than half-a-dozen times before finishing in a vehicle that ends up in a sales lot in either the US or Canada.

This integrated supply chain has been in existence for decades and provides a competitive advantage to the two countries.

After all, there’s no such thing as an American car – there are US companies, brands and operations, but supply chains are integrated and global.

Tit for tat

As was the case during Trump’s first term, tariffs are likely to lead to retaliatory actions.

In response to tariffs on steel and aluminium during Trump’s first administration, countermeasures were imposed in response. Canada imposed tariffs on aluminium and certain types of American steel as well as yoghurt, whiskey and roasted coffee, while the European Union slapped taxes on products ranging from bourbon to Harley-Davidson motorcycles.

Agricultural commodities were very much used as fodder in a tariff war during the first Trump administration, and there’s concern that this situation will be revived.

China hit back against the tariffs with its own taxes on imports of soybeans and pork, a move calculated to weaken Trump’s support among farmers. Since then, China has been diversifying its sources of agricultural commodities, such as corn, soybeans and sorghum – products that it  typically buys from the US.

This time around, the prospect of tariffs on Mexican tequila and beer have been mooted, while Canada could revive its previous tariffs on products including whisky, ketchup, liquorice, and toilet paper, market observers told Fastmarkets.

There is also a risk that the re-routing of goods – when companies export products to the US relabelled via a third country with a lower import tariff – will grow if widespread tariffs are imposed.

This has been common practice in recent years, leading the Biden administration to impose measures to ensure that Mexican aluminium imports had not been smelted or cast in China, Russia, Belarus or Iran and that imported steel from Mexico had been melted or poured in North America.

China still has some powerful weapons in its arsenal, not least its own restrictions on products imported into the US.

China is already crimping supplies to the US of critical minerals on which the latter relies for defence and semi-conductors, such as gallium, germanium, antimony and graphite.

The Asian country could easily expand its restrictions to other products that the US relies on, such as rare earths. Tariffs are a two-way conversation, and China may well have some of its own “trump cards” to play.

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“That’s part of our ask to the DoD: if they want us to crank things up, are they able to finance us to do so? Those are the type of discussions that are going on,” he said in a recent interview.

Those conversations began after China announced it would implement export controls on antimony and related products from September 15.

Evans said the company then started receiving calls from the DoD and has since hosted members of the department at its midstream and downstream processing facilities located in Thompson Falls and Philipsburg, Montana.

“At their request, we submitted a concept paper just over a month ago, detailing all the things that we could use money for in our operations, which we then discussed in person during our meetings last week,” Evans said.

Evans has since followed up with a number of meetings in Washington, DC this week.

“I’m hopeful the government will help me fund a significant expansion of our processing for us, which will also be partially funded by the company. It was very obvious from the discussions with the DoD that there’s a real problem, we all want to fix it, and we collectively have the resources to do so,” he added.

Antimony, used in munitions, flame retardants and lithium batteries, is a critical mineral in the United States as well as in other locations including the United Kingdom, the European Union, Australia, India and Japan.

Feedstock

Over the past several months, US Antimony has interacted with over 50 different parties spanning 16 different countries in its goal of securing new sources of antimony supply.

“All these discussions have been going on over the last three months. We will undoubtedly get some short-term supply, but we’re only going to have consistent supplies if it is our own mined product,” Evans said.

“You’ll probably see us make some announcements before the end of the year about getting some new supplies which is very beneficial – it drops right to the bottom line because we don’t have to add any capital equipment, as we already have it in place,” he added.

The company expects to sell its products in the domestic market rather than export them. In addition to governmental needs, the company already has non-governmental customers “lined up out of the door that want our finished products,” Evans said.

“I think it’s going to be a US product, which will resolve many issues,” he added.

At the same time, US Antimony is sourcing feedstock for its smelter located in Mexico from sources including Australia, Turkey, Thailand and Peru, Evans said.

Own mines

In addition to the planned US smelter expansion, US Antimony – which has been involved with all aspects of the antimony business for over 25 years – is actively working to develop its own sources of mined antimony.

“Antimony has historically been a metal that was deemed somewhat of a nuisance by many miners. That’s because antimony is many times associated with gold or other minerals, and nobody really knew what to do with it because it didn’t have a very high value,” Evans said, adding: “It was difficult to process, and there just wasn’t a whole lot of demand except during wars.”

That started changing about 10-15 years ago, when China began buying up antimony mines in various countries around the world, a move that Evans said in essence, secured control of the market.

“At around the same time, the Environmental Protection Agency (EPA) in the United States was shutting down antimony mines because of its concern over arsenic and other contaminants with regards to pollution. And therefore, as we sit here today, there are currently no active antimony mines in the United States,” he told Fastmarkets.

“So, with a combination of low prices, EPA actions, and other federal regulations, antimony just hasn’t really been mined much, other than at operations controlled by China and some in Australia,” he added.

Evans noted that although antimony is used in ammunition, night vision cameras and binoculars, plus drones and laser-guided missiles, the US military was buying its antimony supply primarily through channels from China. US Antimony is not currently selling anything to the DoD but has been approved following a test-case of munition-grade material a couple of years ago, Evans said.

“There is a real problem; there’s a worldwide shortage of antimony and China is the 1,000-lb gorilla that controls the market. Every day that we’re talking to countries or companies about bringing antimony supply to the United States that we can process, we’re competing with China,” he added.

The company has made a concerted effort to explore for its own antimony sources. It has already leased properties in both Canada as well as in Alaska, the United States. Evans said two more properties are being negotiated that have a prior history of mining antimony.

“Our goal is to be mining antimony in 2025 that we can bring directly to our own facilities, and not have to count on other countries for supply,” he noted.

Evans said the company decided against reopening a former mine located near to the smelter in Montana. The mine was suspended in December 1983 because antimony could be purchased more economically from foreign sources.

“It is just not conducive to open. We looked at it hard and it just doesn’t make any sense – there aren’t enough reserves,” Evans said.

“Antimony is not a very easy ore to mine, because it’s not contiguous – it’s sporadic. Occasionally you find sweet spots, but it is typically associated with other critical minerals, which we have the ability to process at our facility in Philipsburg as well,” he added.

In addition to antimony, the company is involved in six other critical minerals, including cobalt in Canada and tungsten in Alaska.

“The beauty of our processing facility in Philipsburg is that it can handle all those critical minerals – so we can actually take them to the flotation facility and separate them from the trash rocks,” Evans said.

Prices and politics

Antimony prices play a key role in the company’s growth plans.

Evans said that the strengthening of the antimony price has enabled US Antimony to expand its margins because it typically pays a percentage of the Rotterdam price.

The price of antimony has more the trebled over the past year.

Fastmarkets’ twice-weekly price assessment for antimony, MMTA standard grade II, in-whs Rotterdam was $37,500-38,500 per tonne on November 15, up from $11,200-11,600 per tonne a year-ago.

At the same time, Evans said he did not anticipate any change as a result of the election of Donald Trump as President of the United States.

“I don’t think the administration change is going to matter at all. This is a problem that we have got to resolve, and I don’t think it matters if it was a Democrat or Republican in office,” he told Fastmarkets.

“We had very good support from the Democratic Party, and I don’t anticipate that changing with Trump now. The antimony situation has gone all the way up to the White House already; they are aware of it and are pushing the DoD to act on solving the problem,” he added.

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Washington sources told Fastmarkets that one of the first acts of the new administration next year will be to use the rulemaking power of the executive to make fewer electric vehicles (EV) qualify for IRA credits. The mechanism by which they will do this, pundits say, is to make the Foreign Entity of Concern (FEOC) rules even harder to qualify for.

Qualifying was already tricky. A vast portion of nickel was theoretically removed from IRA-compliance when the US Department of Treasury released its definition of a FEOC for the purposes of the act almost a year-ago.

Back then, the Treasury said that companies that have a more than 25% ownership or control by a FEOC – including board seats, voting rights or equity – would not be eligible for tax credits available under the IRA.

At the same time, EV tax credits available through the IRA require batteries be built with at least 40% of the value of their minerals coming from the US or a country with which it shares a free trade agreement; a percentage that increases annually, reaching 100% by 2029.

With FEOC nations being China, Russia, North Korea and Iran, that pretty much removed the majority of nickel being produced in Indonesia, because it has a Chinese shareholder base.

Despite all this, allegations have since arisen that nickel is being brought into the US claiming to be IRA-compliant when it actually is not.

Fastmarkets understands there has been a flurry of behind-the-scenes activity in Washington in recent months, with industry experts and lobbyists sounding the alarm that schemes to evade FEOC rules have been in play.

A change to the FEOC rules comes as western companies remain active in Indonesia and elsewhere, in partnership with Chinese corporates.

That includes US auto firm Ford Motor Company and Brazilian miner Vale, which have an equal joint venture with China’s Huayou Cobalt to build a nickel plant in Indonesia by 2026.

Ford has already faced a backlash at home after it announced plans to use battery cell technology from Chinese firm Contemporary Amperex Technology Co., Limited (CATL) at its planned $3.5 billion battery cell plant in Michigan.

Similarly, fellow US automaker General Motors’ investment in the production of EVs in Indonesia is part of a joint venture with Chinese firms SAIC Motor Corp Ltd and Wuling Motors.

It also includes Eramet’s Weda Bay project, which is 51.3% owned by China’s Tsingshan Holdings.

Pundits say the 45X Advanced Manufacturing Production Credit, which is currently available to any entity in the US, is also expected to be prohibited for FEOC.

Price, projects

All of this raises the stakes on securing IRA-compliant nickel, produced by non-FEOC countries, at a time when the price of nickel isn’t exactly incentivizing new production capacity.

Over the last year, the world has watched as sustained lower prices have undermined the economics of current IRA-compliant nickel in countries like Australia and New Caledonia.

Miners including BHP, Glencore, Wyloo, First Quantum and IGO have all been forced to make tough decisions on projects in response to various factors, with the nickel price environment being a key determinant.

While London Metal Exchange nickel prices have strengthened in recent weeks, they are still more or less where they were a decade ago.

Given that the US EV battery manufacturing sector is largely focused on producing nickel-based batteries, securing non-FEOC material going forward is going to be all the more critical.

There are likely to be a lot of calls going into existing IRA-compliant nickel producers to lock-in units.

Biden-administration-favored projects such as Talon Metals’ Tamarack project and Eagle Mines’ extension project are also likely to be popular among automakers and battery makers looking to secure supplies.

So, too, are projects in other western nations, including Canada, Brazil, Australia and elsewhere.

Fastmarkets estimates that just 8-9% of world mined nickel production, 4% of intermediates supply and 12-12.5% of refined supply is likely to be IRA-compliant between 2025 and 2027. With new projects in the pipeline, those figures rise to 10%, 4% and 13% respectively by 2034.

It was already going to take a wholesale rethink of exploration, technological innovation, permitting and financing through key stages in the US and among its allies in nickel to reach the supply chain security that’s being sought. With zero-tolerance on FEOC going forward, nickel observers say solving those challenges is set to become even more urgent.

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The IRA aims to cut emissions by 40% by 2030, but its ultimate goal is to drive economic growth, create jobs and set a global standard for decarbonization and sustainable practices. It has been described as a landmark in legislative history, directing over $369 billion toward sustainable job creation across the supply chain.

Pundits say a future Trump administration will target changes to tax credits and incentives created by the IRA. That includes tax credits for electric vehicles (EV), tightening qualifications for the advanced manufacturing tax credit with regards to foreign entities of concern (FEOC) like China, and slashing the grant program, industry experts say.

“To further defeat inflation, my plan will terminate the Green New Deal, which I call the Green New Scam,” Trump said in a speech to the Economic Club of New York in September. “[We will] rescind all unspent funds under the misnamed IRA,” he added.

That would be a massive setback to many of the lithium, nickel, cobalt and other critical minerals projects, as well as new technologies and processing facilities, whose future is dependent on grants and loans. According to analysts at Jefferies, around $60 billion out of a total $80 billion of funds for the energy transition across the IRA and Bipartisan Infrastructure Law (BIL) are yet to be awarded or obligated for 2024.

Electric vehicles

Trump has made it clear that the push towards EVs, which have formed a key pillar of the Biden administration’s approach to the energy transition, will now be slowed. During the recent presidential campaign, candidate Trump said that he would “end the EV mandate on day one.”

Initiatives such as the Department of Energy’s grant program, tax credits and other incentives for customers and manufacturers of batteries and EVs are now at risk of being rolled back or eliminated, industry experts say.

It is not clear what might replace current credits, if anything. The clean vehicle tax credit currently requires final assembly in North America, and eligibility depends on increasing percentages of US battery components and minerals being used.

Industry observers say all of these changes would likely have widespread implications through the battery raw materials supply chain for those companies that rely on the financing, including producers of lithium used in batteries and copper and aluminium used in renewables, manufacturers of batteries and components, and automotive firms.

Changes to credits would also affect consumers. The IRA had created a mechanism to transfer the 30D clean vehicle credit of up to $7,500 and 25E previously owned clean vehicle credit of up to $4,000 to registered dealers. This mechanism gives consumers an upfront discount and extends the reach of the credits by making the credit available at the point of sale rather than when buyers file their taxes.

According to the US Department of the Treasury, more than 90% of new clean vehicle transactions and around 80% of used clean vehicle transactions reported through Internal Revenue Service Energy Credits Online currently involve a transfer of the credit to the dealer.

Trump has also said he plans to roll back or eliminate standards for EVs under the Environment Protect Agency (EPA). Having already stated a desire to get rid of California’s zero emissions standards, Trump is also expected to do away with the requirement that EVs account for 56% of new vehicle sales by automotive original equipment manufacturers (OEMs) by 2032, and plug-in hybrids or other electric cars account for at least 13% in the same period.

The move would in theory ease pressure on Detroit’s Big Three – Ford, General Motors, and Stellantis – to switch their production lines to EV, which some argue is a boost for the US auto sector as it struggles with slowing sales of clean energy vehicles. Others argue that in the longer term, a move away from EVs could lead the US to fall further behind the rest of the world as foreign competitors continue to innovate and produce EVs.

It would also inevitably have an impact on the 30 gigafactories in development in the US as it actively pursues sustainable mobility and technological innovation.

There is also the question of tariffs, another key policy area for Trump. There is already a 100% tariff on Chinese-made vehicles imported into the United States.

Now other foreign-made cars are likely to face higher tariffs, a move that has not been lost on investors as stocks in Mercedes-Benz, Porsche and BMW fell sharply as the election result was announced.

It remains to be seen what this will mean for Tesla, whose chief executive officer Elon Musk has actively campaigned for Trump and which has around 40% of its manufacturing capacity in China. Shares in Tesla soared on Wednesday November 6 following the news of Trump’s win.

Foreign Entity of Concern

A key area that could come into the spotlight are sourcing requirements related to FEOC. When it comes to the 30D credit, FEOC rules permit licensing deals and joint ventures with under 25% ownership.

The expectation is that these rules become stricter, a move that will have important short-term implications for nickel, a market that is struggling to find non-FEOC sources for battery raw materials supply chains.

Similarly, the 45X Advanced Manufacturing Production Credit, which is currently available to any entity in the US, is expected to be prohibited for FEOC.

There is bipartisan support for this, with a group of Senators having already proposed the American Tax Dollars for American Solar Manufacturing Act, which aims to stop Chinese solar panel manufacturers from claiming subsidies for operations in the US. The Act would not just apply to the solar industry but across all technologies eligible for the 45X credit.

Politics

But all of these potential changes are not without potential complications. While there are nuances in the approach of Democrats and Republicans, there has been solid bipartisan agreement on the importance of strategic competition and supply chain security for the US.

Not all Republicans support the elimination of tax credits and subsidies; after all, many IRA projects are concentrated in traditionally Republican states and create permanent jobs.

This was highlighted in a letter sent in August to House Speaker Mike Johnson, signed by 18 House Republicans, expressing objections to repealing IRA credits on the grounds that it would halt project development and undermine investments.

“Energy tax credits have spurred innovation, incentivized investment, and created good jobs in many parts of the country – including many districts represented by members of our conference,” the letter said.

“We must reverse the policies which harm American families while protecting and refining those that are making our country more energy independent and Americans more energy secure. As Republicans, we support an all-of-the-above approach to energy development and tax credits that incentivize domestic production, innovation, and delivery from all sources,” it added.

Outright repeal of the IRA would require the support of both houses of Congress; as it currently stands, the Republicans have won the Senate and the result for the House of Representatives is unclear as votes are still being counted.

Changes to tax credits meanwhile require a change in tax law; a weakening of IRA provisions as part of Budget negotiations would require a simple majority in Congress.

But Trump could move to defund or limit EV subsidies through executive orders or other policy actions, industry experts note.

Given the focus Trump’s administration will have on extending tax cuts that are set to expire at the end of 2025, there is a clear incentive to find the money to pay for this from elsewhere, adding impetus to the potential IRA changes.

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“For years, we were the price setter for copper treatment charges (TCs), being the largest concentrate producer. But now we have the new smelter in Gresik, we don’t have a need to place concentrate like we did,” Quirk said.

“It’s a major change in the market, Freeport switching from concentrate marketer to a cathode marketer,” she added.

The timing of the new smelter comes as copper concentrate supplies remain tight, which is a situation that has been exacerbated by the ongoing closure of the Cobre Panama project.

“Our smelter has been in progress for many years, so it’s not a surprise to the market. It just happens to coincide with some other supply issues at the same time,” Quirk said.

Fastmarkets’ latest assessment for its copper concentrate TC index, cif Asia Pacific, was at $2 per tonne on Friday September 27, up from $(1.90) per tonne a week earlier.

TCs are the fees that mining companies pay to smelters to have their semi-processed ore, or concentrate, turned into finished metal. Typically, tighter spot supply leads to a drop in spot TCs.

The new smelter is located in Gresik in the East Java province of Indonesia, and has the capacity to process around 1.7 million tonnes of copper concentrate annually.

“It’s a little bit of a white-knuckle time when you’re starting up something like this. It’s a very complicated operation, but our team was well prepared for it and we’ve got people on site that have expertise in smelting. We’re fortunate at Freeport that this isn’t our first smelter,” Quirk said.

But timing issues could emerge, given that the company is addressing some teething problems throughout the start-up process, according to Quirk.

“We don’t think there’s any material change, but we’re going to have some timing issues that we’ll have to work through. However, nothing out of the order,” Quirk said.

Freeport is also undergoing the application process to apply for an extension of its special mining license in Indonesia, which currently expires in 2041.

The new regulatory environment in Indonesia allows applications for a life of mine extension when a company is fully integrated and has at least 51% Indonesian ownership, criteria Freeport meets, Quirk said.

A further requirement is for the sale of an additional 10% of its stake to the state-owned company, which Quirk said Freeport is in the process of negotiating.

“We’ve been talking with the government about our commitment to continue our positive momentum and continue to invest, so that the benefits of our operations can continue well into the future,” she added.

Freeport’s copper sales in the second quarter of 2024 came in at 422,294 tonnes. The company expects sales of 1.85 million tonnes of copper this year.

Mergers and acquisitions

Mergers and acquisitions remain a discussion within the copper industry, which has recently seen a flurry of activity amid a growing recognition of the red metal’s role in the electrification and infrastructure required for the energy transition, according to Quirk.

“Everybody is looking at the fact that copper is a commodity that is going to have continued demand growth and limitations on supply development. So when companies are looking at growth and they want exposure to copper, it’s hard to do it organically,” she said.

“I think M&A will continue to be topical, but for a variety of reasons, there are not a lot of sellers, or any sellers of anything of quality. So while M&A might be talked about a lot, it may not be very actionable,” she added.

Freeport is focusing on creating long term value for its shareholders through organic opportunities but is also keeping its “ears and eyes open for what might be out there”, according to Quirk.

“You have to be prepared to act and be opportunistic when the time comes, but you can’t base your strategy on it, because you need two parties to tango, and it’s not totally in your control, as we’ve seen,” Quirk told Fastmarkets.

“We’re in the commodity we want to be in. We’ve got the right assets in that commodity and we’ve got the opportunity to grow. So we’ve got a clearly defined strategy, and execution is key to delivering it,” she added.

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“A week or two ago, people would have been bearish on China. But now, with the country’s stimulus activity combined with the actions by the US Federal Reserve [to cut interest rates], we’re seeing more positive sentiment, and that’s obviously helping copper prices,” she added.

The three-month copper price on the LME was $10,084.50 per tonne at the 5pm close of trading on Wednesday October 2, up by 1.06% from Tuesday’s close.

Key supply challenges include the ongoing demand drivers for copper used in electrification and renewable energy, the surge in demand for the metal in the electrification networks at data centers, as well as the lack of new mine projects in the pipeline, according to Quirk.

“Over the last two years, customers have been saying things are really good. There has been an overhang from China’s property sector, but it’s been more than offset with these new uses for copper. Maybe these secular trends will help reduce copper’s cyclicality,” Quirk said.

There are also concerns that higher copper prices could spur a shift to a substitute away from the metal, whereby this has typically meant a move to aluminium in previous years, although the level of substitution has been relatively small, according to Quirk.

“Over the years, where it makes sense to substitute copper out, the easy things have already been done. Copper’s property of conducting electricity is very hard to replicate, but there are certain segments that you can use aluminium, and those are being done at the margin,” Quirk said.

“But substitution hasn’t been that significant of a factor – something to the order of 1-2%,” she added.

Freeport is focusing on growing its supply, with a major internal leaching initiative as well as some development projects it plans to pursue. The leaching initiative involves using new technology to enhance the recovery of materials from its existing leach operations.

Around half of the company’s leach stockpiles are located at Morenci, which is an open-pit copper mine in Arizona. Around 16% of the total is located at Freeport’s sites in South America, with the remainder at its other operations in the US.

Freeport has already hit its initial leaching target of 200 million pounds (roughly 90,700 tonnes) at the end of last year and is looking to continue to scale this up, with an objective to get to 300-400 million lb in 2026, Quirk told Fastmarkets.

Leaching is a process that removes material from a mine and places it directly into a stockpile. These stockpiles are then irrigated with a leach comprising a sulfuric acid solution, which breaks down the material and leaches the copper mineral to allow the copper to dissolve and be collected.

“Leaching allows us to bring on additional pounds of copper at a time when our grades are low, so it’s incrementally positive from a production standpoint,” Quirk said.

“Then financially, it helps us bring down our costs in the US because the cost of these incremental pounds is below $1.0 per lb of copper and our average in the US is around $3.0 per lb,” she added.

Freeport’s copper sales in the second quarter of 2024 were 422,294 tonnes. The company expects sales of 1.85 million tonnes of copper this year.

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“We are going to come with our own decision in the coming weeks and we are in negotiations with our customers. But we will not have a number this week,” he said in an interview during the annual London Metal Exchange industry week.

Last year, Codelco offered a premium of $234 per tonne to European customers for its 2024 copper cathode contractual supplies.

This was the same as its offer for 2023 supplies and an 80% jump from 2022 contracts.

European copper company Aurubis recently settled its 2025 European contract offer at $228 per tonne, unchanged for the third consecutive year.

“The US copper market is super strong, it’s been strong for some time now, with a rebound tied to restocking and improved consumer demand. Europe has been a little bit weaker, but we haven’t seen any cuts in orders,” he said.

Fastmarkets assessed the copper grade 1 cathode premium, ddp Midwest US at 11-13 cents per lb on Tuesday October 1, unchanged since July 23.

Fastmarkets’ fortnightly assessment of the copper grade A cathode premium, delivered Germany was $170-190 per tonne on Tuesday October 1, unchanged from the prior week.

Pacheco meanwhile said that China’s recent stimulus package was putting money in domestic consumers’ pockets and would encourage growth in consumption. Recent signs of falling copper inventories and strengthening physical premiums were also a move in the right direction, he noted.

“We are seeing a growing rebound in Chinese demand. I think it’s important to take into account that Chinese copper consumption last year grew significantly, roughly 6-7%, so any percentage is on a relatively high basis of comparison,” Pacheco said.

“While people were probably hoping for better numbers, we’ve still seen around 3% demand growth so far this year. So we are confident that through the rest of the year, Chinese consumption should follow an upward trajectory,” he added.

Fastmarkets assessed the daily benchmark copper grade A cathode premium, cif Shanghai at $55-68 per tonne on Wednesday October 2, unchanged from the previous assessment. 

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The post Codelco’s copper premium contract talks ongoing, chairman says: LME Week appeared first on Fastmarkets.

The company chose Rothschild bank to help identify and select a partner to create a joint venture in which Codelco holds a majority stake of 51%.

“We have received a number of initial proposals from serious industry participants, and we are in the process of evaluating these proposals with the view to shortlist parties for further new diligence in due course,” he said.

“The process remains highly competitive, and we are very pleased with the level of interest we are seeing in partnering with us,” he added.

The plan is to select one partner, not multiple, Pacheco noted.

“It is customarily and expected by all participants that while the process is being run, we keep the identity of the participants and their proposals confidential,” he added.

The process is part of a plan by Chile’s government to boost the country’s lithium production. 

The company is also working to complete the various legal, regulatory, technical and environmental requirements, along with the respective indigenous consultation process, for its partnership with Sociedad Química y Minera de Chile SA (SQM).

The partnership was initially announced in a Memorandum of Understanding released in December 2023. It will be implemented through a joint venture in which Codelco will own 50% of the shares plus one, and will have two periods of operation: from the date the partnership becomes effective through December 31, 2030, during which SQM will oversee general management; and from January 1, 2031 to December 31, 2060, during which Codelco will oversee general management.

Starting in 2031, the state will receive 85% of the operating margin of the new production through payments to the Chilean government agency Corfo; taxes; and the profits received by Codelco as a shareholder.

“I am very pleased about the progress that we’ve made, and we continue to be very positive about the idea of finalizing the approvals and other actions during next year,” Pacheco added.

Fastmarkets most recently assessed the spodumene, min 6% Li2O, spot price, cif China at $800-820 per tonne on Tuesday October 2, down from $1,000-900 per tonne at the start of the year.

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“We interpret the current condition of the concentrates market as a dislocation from both sides of the equation. First, there is lower availability of concentrates in the market, but it also represents some excess capacity in the smelting business,” Pacheco said.

“We have not heard firm news about closures yet, but we understand that some of the smelters that are more exposed to the spot market are even more likely to close,” he added.

But Pacheco said that it was important to bear in mind that smelters in China were very cost-competitive, meaning that, even in the current market conditions, “they still have some level of resilience that will allow them to continue to operate and meet their production targets.

“We could also see cuts elsewhere in the rest of Asia, depending on the level of exposure to the spot market,” he added.

Copper smelters typically have some percentage of copper concentrate contractual supply tied to annual benchmark treatment charges (TCs), which were agreed in November last year between Antofagasta and China’s Jinchuan Group at $80 per tonne for 2024.

But the spot market has changed considerably since then, because supply tightness has worsened.

Fastmarkets most recently calculated its weekly copper concentrate TC index, cif Asia Pacific, at $2 per tonne on Friday September 27, up from $(1.90) per tonne a week earlier.

TCs are the fees that mining companies pay to smelters to have their semi-processed ore, or concentrate, turned into finished metal. Typically, tighter spot supply leads to a drop in spot TCs.

Benchmark negotiations for 2025 were currently under way.

Pacheco said that while expectations were for the parties to agree a lower number than for 2024, it was not clear what that number would be.

“For miners, and for Codelco, it is very important to have a healthy supply chain,” he said. “We’re not here only for the short term; we care about the long term and the effect of the tight industry conditions.”

How smelters would approach the talks was also uncertain, he told Fastmarkets, particularly in terms of the level of spot market exposure they would seek.

“If spot TCs are very low and the benchmark is very low, some smelters may want to wait and see what happens with the spot market,” he said. “Others might say, okay, maybe this level is bad, but it could be worse, so we are going to secure supply now.”

Codelco has been supplying the Chinese market for decades, Pacheco said, but has also been expanding its client base in South Asian markets, including India.

“Our commercial strategy is two-pronged. One of them is pursuing flexibility – we need flexibility to move in a volatile market,” he said. “But at the same time, we understand that value creation is a long-term process, so that means we value long term relationships with clients.”

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The post Copper concentrates dislocation likely to mean smelter cuts, Codelco chair says: LME Week appeared first on Fastmarkets.

“The LME has a fantastic dates structure and associated features that make our physical market offering best in class. As you can imagine, we don’t and wouldn’t do anything that would in any way change that,” he told Fastmarkets in an interview on Wednesday September 4.

“But we also know good markets benefit from liquidity, and liquidity is enhanced by bringing in players from all different types of end clients,” he added.

He cited the example of the LME’s lead contract, which was added in 2023 to the Bloomberg Commodity Index (BCOM).

“I’ve heard nothing but positive feedback from both financial and physical clients about the way [the addition of lead to BCOM] enhanced liquidity and volume in the lead market [and] made it easier to hedge, invest and price,” Chamberlain said.

He noted that a set of clients – both financial and physical – would like to have the simplicity of using standard monthly dates.

“I think it’s in everyone’s interests that those clients have as efficient an execution experience as possible and that we encourage more business and new participants in the market,” Chamberlain said.

“We have an incredible opportunity to move forward as an integrated trading community for an outcome that’s clearly good for the client in terms of liquidity, good for members in terms of enhanced volumes and trading opportunities and positive for the exchange in terms of its volumes and ability to offer liquidity to the market,” he added.

White Paper

The LME said in a White Paper that from the second half of 2025, small trades on liquid dates of up to 10 lots would have to be placed on LMEselect, the exchange’s electronic trading platform. If, after five seconds, the order was not filled on the system, then the trade can be crossed by the member in the normal way.

The plan also applies to over-the-counter (OTC) contracts of 10 lots and below referencing LME prices or infrastructure, as well as trades on the various dealer-to-client platforms that have emerged in recent years and which offer proprietary monthly pricing direct to clients.

Equally important is what has not been included in the plan, Chamberlain said.

“None of the averaging, bespoke dates, cash dates or large trades where liquidity is not immediately displayed on screen would be affected,” he said.

“We have the ability to be very nuanced in the way that we introduce this in order to reflect market structure, best practice and standardization where that’s appropriate on the monthly dates and to really protect what makes the LME unique on other dates,” he added.

Currently, around 48% of LME volume is traded on LMEselect, with the ring accounting for less than 1% and the remaining majority being inter-office bilateral transactions.

Chamberlain said he would be very satisfied if the plan eventually resulted in around 60% of volume being traded on LMEselect.

“We will always have a bigger inter-office market on the LME than any other exchange, because we have got the averaging, the bespoke dates and some very big clips [of business] going through as a result of being a big industrial exchange. I don’t think we would ever look to force that business on to the screen, because it just wouldn’t work,” he said.

“But that extra 10-12% is absolutely crucial because it’s the percentage of people who currently want to trade on LMEselect but don’t. If we go too high and force people on to LMEselect that don’t want to be there, we will have failed, just as much as if the percentage is too little,” he told Fastmarkets.

“The ‘just right’ amount is the percentage of people who want to be on LMEselect – currently, we’re below that level. We want to get to exactly the right number, and not a percent more,” he added.

Peers

Block trade thresholds are already a feature of the LME’s peer exchanges, Chamberlain said, adding that the exchange nonetheless is not aiming to be the same as them.

“Our peer exchanges don’t have a dates structure, averaging, a set of members who will provide access to bespoke pricing, a cash price every day. We have all those things, and we are not touching them; they are not in any way impacted by our block limits,” he said.

“I strongly believe we can learn from peer exchanges where relevant to the financial segment of the market and give people a more peer-like exchange execution experience. But for the physical business, we have nothing to learn from the different exchanges,” he added.

The exchange is planning to set up a working group drawn from its members to discuss the proposals, with meetings expected to start from October, Chamberlain said.

The LME will also launch a liquidity provider program, initially focusing on the spreads from three-month to the nearby monthly dates and some monthly-to-monthly spreads, he said.

A key element of being able to proceed efficiently with the plan will be the launch early next year of version 10 of LMEselect.

The new platform will have improved functionality and deliver a more deterministic low-latency trading platform with additional features that help support electronic trading, the LME said.

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The post LME physical users won’t be harmed by block trade plan, CEO says | Hotter Commodities appeared first on Fastmarkets.