Chilean mining group Antofagasta plc and a Chinese copper smelter have finalized a deal for 2026 treatment and refining charges (TC/RCs) at an unprecedented $0 per metric ton and 0 cents per pound. This agreement represents the lowest annual terms ever reached in the concentrate market, contrasting sharply with the 2025 benchmark of $21.25 per ton and 2.125 cents per pound. This mid-year settlement at zero underscores the critical shortage of global copper concentrate supply, leading some analysts and smelters to describe the outcome as "better than expected" given current negative spot charges—some hovering around negative $43.
The severe tightness in copper concentrate supply, particularly notable for 2025 and 2026, is largely due to disruptions at major mines such as Grasberg in Indonesia and Kamoa-Kakula in the Democratic Republic of Congo. These outages have significantly reduced the availability of concentrate on the spot market, pushing spot processing fees into negative territory, meaning smelters effectively have to pay for the raw material that normally generates revenue for them. While this zero-fee arrangement benefits miners like Antofagasta by increasing their net realized copper price, it will deepen losses for Chinese smelters, for whom TC/RCs are a crucial revenue source, typically comprising about one-third of their income.
The deal is expected to serve as a key reference point for other negotiations in the market. The China Smelters Purchase Team (CSPT), a group of major Chinese copper producers, had previously announced plans to cut smelter output by over 10% in 2026 to rebalance concentrate supply and demand, signaling the intense pressure facing the industry. This record-low benchmark agreement may force less efficient smelters, especially in China, to consolidate or close, and supports a bullish medium-term outlook for copper prices as demand from electrification and energy transition sectors continues to rise amidst supply constraints.
