Copper at a crossroads: strategic insight amid policy risk and smelter margin pressures

CESCO Week, one of the mining industry's premier annual gatherings, is held every April in Santiago, Chile. Organised by the Center for Copper and Mining Studies (CESCO), this event brings together global mining executives, investors, government officials, and experts to discuss key market trends, challenges, and opportunities, with a particular focus on copper and critical minerals. The week-long event features conferences, networking opportunities, and private meetings that shape industry dialogue for the year ahead. These discussions and interactions play a crucial role in setting the tone for the copper sector's strategic direction and fostering collaboration among key stakeholders.

With CESCO Week 2025 closely following President Trump’s ‘Liberation Day’, it was no surprise that conversations between participants centred on emerging macroeconomic uncertainties, changing trade flows, and their potential impact on long-term fundamentals. However, two major concerns dominated discussions: the US tariffs under a second Trump administration, and the sustained decline in treatment and refining charges (TCRCs) for copper concentrates.

Tariffs in focus: a new era of trade risk

Tariff policy took centre stage, as reciprocal tariffs between the US and China escalated during the week. While concrete answers were elusive, the risk of broad-based tariffs—and their ripple effects on global demand—was widely acknowledged. Higher tariffs could elevate inflation, keep interest rates higher for longer, and suppress industrial activity, presenting demand-side headwinds even in an otherwise supportive copper market.

However, despite imports of copper into the US being currently exempt from the tariffs announced on April 2, the threat of tariffs remains, dependent on the results of the Section 232 investigation. Consensus amongst participants appeared to be not if imports of copper into the US would be tariffed, but rather when.

Participants were keen to unpack several unresolved questions:

• What level might new tariffs reach—10%, 15%, or even 25%?
• Would US allies or key suppliers like Chile be exempt?
• How likely is it that new trade barriers would be maintained?

Price signals and arbitrage: the market reacts

Market anxiety was already visible in pricing behaviour. Copper rallied over the first quarter of 2025, buoyed by speculative interest and a weakening US dollar but gave back gains as fears of inflation and trade friction resurfaced. In addition, the expanding COMEX-LME arbitrage—reaching a differential of up to 15%—highlighted the market's sensitivity to policy signals and opened the door for opportunistic shipments toward the US.

TCRCs under pressure

If tariffs dominated the macro conversation, TCRCs were the central operational concern. Most participants agreed that a meaningful recovery in TCRCs is unlikely in the near term. Despite tight concentrate supply, many smelters have avoided permanent closures and continue to operate at lower utilisation rates, maintaining the structural imbalance that keeps treatment charges under pressure.

By-products reshape the revenue narrative

An important thematic shift emerged: by-product credits are increasingly critical to smelter economics. With sulphuric acid, gold, and silver prices at or near historical highs, these secondary revenue streams are cushioning the blow of falling TCRCs. Smelters with diversified feedstocks and higher recovery rates are especially well-positioned to benefit, underscoring the importance of integrated commercial strategies.

Long-term fundamentals: demand still anchored

Despite near-term uncertainty for demand, the long-term outlook for copper remains strong, underpinned by decarbonisation and electrification. As a result, the call on the mining industry to meet future demand remains significant, underscoring the need for continued capital investment, exploration, and innovation across the value chain.

Strategic takeaways: navigating complexity ahead

CESCO 2025 served as a timely strategic pause for the industry. While the tone was more measured than euphoric, it reflected a maturing perspective—one that acknowledges complexity but remains committed to copper's central role in the energy transition. The path forward will be shaped not just by supply and demand, but by the interplay of policy, trade, operating margins, and evolving revenue strategies.

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