By Yuka Obayashi and Kentaro Okasaka
TOKYO (Reuters) -JX Advanced Metals will likely cut copper production by tens of thousands of metric tons in fiscal 2025 from earlier plans and unveil a roadmap to scale down smelting capacity by March, President Yoichi Hayashi said, as shrinking fees erode margins.
Japanese copper smelters are grappling with tumbling treatment and refining charges (TC/RCs) and shrinking smelting margins due to a shortage of concentrate supply and growing smelting capacity in China. In June, some Chinese smelters agreed to process copper for Chilean miner Antofagasta at no charge, a record low.
“In the short term, we plan to slash annual electrolytic copper output by several tens of thousands of tons from our earlier estimate as we can’t purchase concentrates under current conditions,” Hayashi told Reuters this week.
JX, one of Japan’s top copper smelters with 450,000 tons of annual production capacity, warned in June that cuts were possible. Its fiscal year ends in March.
Longer term, it intends to shrink capacity to reduce risks in concentrate procurement and smelting, Hayashi said, though he gave no scale.
Roughly half of JX’s refined copper is exported, mainly to China, where demand could weaken as new domestic smelters ramp up. Rival Mitsubishi Materials is also weighing reductions.
Despite cutbacks, Hayashi stressed that smelting remains essential for recovering rare metals, such as tantalum, critical to semiconductor materials, a key growth business.
“We are reviewing the optimal scale from various perspectives, including the use of recycling materials,” he said.
Mid-year negotiations between Japanese smelters and global miners broke off without a TC/RC settlement, forcing firms to skip contracted term supplies, industry sources said.
Hayashi said some miners are willing to negotiate different terms with Japanese firms from the Chinese benchmark deals to help sustain the world’s fourth-largest smelting sector.
JX is accelerating its pivot away from mining and smelting toward semiconductor materials. In June, it said it would acquire a stake in the Copi mineral sands project in Australia, led by RZ Resources, to secure rare metals used in chip materials.
“We are actively seeking new projects,” Hayashi said, adding that future upstream deals would be far smaller than its past Chilean copper mine investment, which resulted in heavy impairment losses.
Since its March listing, JX has streamlined decision-making and enhanced investor engagement. It recently raised its full-year earnings forecast, with Hayashi expressing confidence in achieving fiscal 2027 goals, including an operating profit margin of 12% to 17%.
By 2040, JX aims to more than double operating profit to 250 billion yen ($1.7 billion).
“Achieving our 2040 goal will require not only organic growth but also large-scale M&A starting in fiscal 2028,” Hayashi said.
(Reporting by Yuka Obayashi and Kentaro Okasaka; Editing by Jamie Freed)
