CEO LETTER: Priced at Zero
August 2026
What a record year for copper revealed about how we refine it
Two Numbers From the Same Year
Two numbers came out of the copper market this year that should not belong together.
The first: earlier this month, copper hit a fresh record on COMEX, near $6.71 a pound, up roughly 47% over the past twelve months, and the companies that mine it are posting their strongest results in a decade as a result. The IEA's Global Critical Minerals Outlook 2026 also reports that in 2025, operating margins grew from 17% to 21% as production costs fell. It has rarely been a better time to own a copper mine.
The second: in January 2026, the benchmark treatment and refining charge, the fee a mine pays a smelter to turn its concentrate into finished metal, settled at zero dollars per tonne, the lowest figure ever agreed. For smelters with uncontracted transactions, their reliance on spot charges makes their situation even more striking. In early July, spot charges reached roughly negative $127 a tonne, which means a smelter has to pay millions of dollars to take the mine's concentrate off its hands. The fee for the primary thing these smelters exist to do has not just fallen to zero, it has inverted.
Same metal. Same year. One half of the industry is thriving; the other is being paid nothing to keep the lights on.
That gap is telling us something important about how the world makes copper, and about what it will actually take to close the supply gap electrification demands.
A Toll Bridge That Gives Away the Toll
Picture the only road from the mine to the market. For decades it crossed a single toll bridge, and that bridge was the smelter. It charged for the crossing, because nothing reached the market without it. Then a competitor built a second bridge alongside the first, ran it below cost with state backing, and drove the toll to zero. The original bridge stays open only by selling coffee to the drivers idling on it.
That is close to a literal description of the copper midstream. Since 2005, China has accounted for more than 90% of the growth in global copper smelting, lifting its share from around 15% to roughly half of world capacity, according to the IEA. That build-out has outrun the concentrate available to feed it, and the scramble for units has driven processing fees to zero. Smelters outside China now run below 70% of capacity while China's run near 85%. That gap is actually meaningful. China sits at the low end of the cost curve, with the state behind it, so it is the one operator that can run at a zero fee more or less indefinitely. Everyone else is being squeezed toward the exit, and the IEA is blunt about where that leads: as smelters outside China close, the world's dependence on Chinese processing does not ease. It gets worse.
So how does a smelter survive on a zero fee? It sells the coffee. The IEA is explicit that many smelters remain profitable only because of by-product sales: the gold, silver, and sulfuric acid recovered alongside the copper, all at record prices. The core business of refining copper earns nothing; the by-products are carrying the entire operation. With the reliance on high commodity prices across the board, these conditions will not hold.
And we don’t have to guess what will happen when that link actually breaks. This month a single furnace outage at one of Indonesia's largest and newest copper smelters, 342,000 tonnes of annual cathode capacity offline for repairs, helped drive the London market to its tightest squeeze of the year. The mine kept producing. The smelter did not. Reliance on particular smelters is remarkably shaky to say the least.
Why the Money Will Not Follow the Metal
Copper is the single largest capital requirement in the entire critical minerals pipeline. The IEA puts the investment needed at about $310 billion by 2040, just to bring enough copper online. The comfortable assumption is that record prices will summon that capital. Unfortunately, that won’t be the case for the place it is needed most.
The IEA's own project data shows the money flowing almost entirely to mining, not to processing. Copper miners raised capital spending by 8% last year on confidence in the metal. But building refining capacity outside China costs 20% to more than 150% more than it does inside it, with operating costs roughly 50% higher. No rational investor pays that premium to enter a business whose benchmark fee is zero. The IEA calls the result a structural imbalance: mining is diversifying across the world while the midstream stays locked in one country.
Read those facts together and the conclusion is hard to avoid. More smelters will not be built where the world needs them, and under the current method, they should not be. Pouring $310 billion into a process the market has already priced at zero is not a wise plan. It is a way to lose money slowly while the concentration that caused the problem gets worse.
The price signal to the market is real. It simply is not reaching the actual bottleneck.
The Metal Is Not the Constraint. The Method Is.
It would be easier to adjust if the problem were geology. It is not. The copper is there. What stalls is the method used to free it.
The dominant route, concentration by flotation followed by smelting, carries consequences communities will no longer accept: the potential for acid mine drainage that outlives the mine by generations, fugitive sulfur dioxide, and tailings that remain a liability long after the last tonne is shipped. Projects stall not because the copper is absent but because the processing method is no longer welcome next door.
So the same method that has been priced at zero is also the method the world is refusing to permit. It fails on economics and on trust at once. That is not a bottleneck you widen. It is one you route around.
The shift to a new method is needed now. On June 29th, the Democratic Republic of Congo, the world's second-largest copper producer, banned exports of copper and cobalt concentrate outright, to force processing onto its own soil. The traded volume is relatively small today, but the signal is not. A major producing nation is refusing to keep shipping the value abroad. With strong local opposition to the current methods, the growth of domestic processing is unclear.
A Different Road
So let me be plain about the way out, and about our own stake in it. If refining copper the old way has been priced at zero, the answer is not a cheaper version of the old way. It is to change what has to be processed, and where the value lands.
Our RACER process recovers copper from a rougher concentrate by a combination of reductive and oxidative leaches, avoiding combustion, then plates the cathode with the same solvent extraction and electrowinning the industry already relies on. There is no smelter in the chain. And because we move upstream by processing a rougher concentrate, more value is created for the mining companies, encouraging a shift away from the old method. Removing the constraints of what a smelter needs frees up the mining companies to maximize recovery, minimize costs, and most importantly reduce the environmental burden placed on local communities.
The economics run the opposite way to the smelter's. The by-products a smelter now survives on as an afterthought, the acid, the sulfur, the precious metals, become primary revenue when the copper is processed at the mine instead of shipped across an ocean to be refined. I made that polymetallic case in an op-ed for Mining.com this spring, so I will not repeat it here. The point for today is narrower: the value of processing copper does not have to be zero. It is zero only because we still do it in a way that gives the value away.
What the Price Is Telling Us
A price is a signal, and this one is unambiguous. A record copper price says the world wants the metal. A zero processing fee says the way we make it has stopped creating value where the metal is made. Both are true, and both point the same direction: the metal is worth everything, and the old way of making it is worth nothing. The right response is not to wait for the midstream to heal itself. It is to build the way that makes processing worth something again, at the mine, close to the copper and the people who own it: a method clean enough that the community next door welcomes it, and priced so the value stays with the country that owns the ore. That is how the supply gap actually closes, and it is the only version of closing it worth building.
That is the work we have chosen. If you are weighing where to put copper capital, or sitting on a deposit the current method has stalled, let’s talk.