Playing defense
New commentary for Center on Global Energy Policy
As I sit here basking in the glow of Arsenal winning the Premier League last night (and will be for a while), I’m reminded that defense is just as important as a good offensive strategy. (For those not following the Premier League, Arsenal won the league for the first time in 22 years with a historically good defense thanks to the folks above).
The same goes for critical minerals and industrial policy.
Sure 1-0 victories and brownfield sites are not as exciting as flowing soccer or brand new facilities with ribbon cuttings. But they are just as vital for long term success.
That is the basis of the latest report from Tom Moerenhout and I for the Center on Global Energy Policy. In this case it is going on the defensive in the copper supply chain. Our report, Protecting Existing US and Allied Copper Smelting Capacity, looks at why the United States, Europe and allies need to ensure that existing copper smelters are not forced to shut down.
There is no energy transition, data center build out, or AI without copper. And fortunately, copper is a critical mineral supply chain that China does not completely dominate. As of 2024, China accounted for only about 8 percent of copper concentrate production.
Unfortunately, due to a series of reasons that we discuss in the piece, the smelter market could become concentrated in China. Copper smelters convert copper concentrate, the material produced from mined ore, into blister copper, a semi-refined product containing roughly 99 percent pure copper. The semi-refined product is then refined into 99.999 percent copper cathodes and other copper products. Approximately 80 percent of global copper mines produce copper concentrate that needs to be smelted. China accounts for approximately 48 percent of smelting output. We argue this number will rise without government intervention.
The full report can be found here - Protecting Existing US and Allied Copper Smelting Capacity.
Or
TL;DR: Overcapacity in the smelter market causes by a series of reasons has led to the collapsing of treatment and refining charges—they hit $0 in 2026 benchmarks and negative $90/ton on the spot market. This is pushing US and allied copper smelters toward closure, while Chinese smelters survive on half the operating costs and vertical integration. Any lost capacity would shift to China, deepening its grip on a supply chain essential to AI, data centers, and electrification. We urge defensive measures over new builds: modernization grants, introducing PTCs or extending the 45X tax credit to copper, and a TC/RC price floor for market-reliant smelters.
And now on to the Champions League final…COYG!!