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As margins shrink, a major Japanese copper smelter will reduce output and capacity.

JX Advanced Metals is likely to cut copper production in fiscal 2025 by tens or thousands of tons compared with previous plans. The company will also unveil a roadmap for reducing smelting capacities by March.

Due to the shortage of concentrate and increasing smelting capacity, Japanese copper smelters have been struggling with tumbling treatments and refining costs (TC/RCs). Some Chinese smelters have agreed to process copper at no cost for Chilean miner Antofagasta.

Hayashi said this week that "in the short-term, we plan on reducing annual electrolytic output by several tens thousands of tons compared to our previous estimate because we cannot purchase concentrates in current conditions."

JX, a major copper smelter in Japan with a production capacity of 450,000 tons per year, warned that possible cuts could be made. Its fiscal period ends in March.

Hayashi, who did not give a scale, said that Hayashi intends to shrink the capacity in order to reduce risk when it comes to concentrate procurement and smelting.

JX exports roughly half of its refined copper, mostly to China. However, the demand for this product could fall as more domestic smelters are built. Mitsubishi Materials, a rival company, is also considering reductions.

Hayashi, when asked if a lower output of copper would have an immediate impact on domestic industries, said that there would not be any immediate impact as only half was used in the country. He said that if more capacity is needed, then the government should support it.

Hayashi said that despite the cuts, smelting is still essential to recover rare metals such as tantalum. This metal is critical for semiconductor materials and a key business growth.

He said, "We are reviewing optimal scales from different perspectives including the use recycling materials."

Sources in the industry said that mid-year negotiations between Japanese smelters, and global miners, broke down without a TC/RC agreement, forcing firms not to fulfill their contractual term supplies.

Hayashi said that some miners were willing to negotiate with Japanese companies different terms from those of the Chinese benchmark agreements to sustain the fourth largest smelting industry in the world.

JX has accelerated its shift away from mining and melting towards semiconductor materials. In June, JX announced that it would purchase a stake of the Copi mineral-sands project, which is led by RZ Resources in Australia, in order to secure rare metals for chip materials.

Hayashi stated that the company is actively looking for new projects. He added that its future upstream deals will be much smaller than their previous Chilean copper mine investments, which resulted heavily in impairment losses.

JX has improved investor engagement and streamlined its decision-making since its March listing. Hayashi, the CEO, expressed confidence that it would be able to achieve fiscal 2027 goals including an operating margin between 12% and 17%.

JX wants to double its operating profit by 2040 to 250 billion yen (US$1.7 billion).

Hayashi stated that "achieving our goal of 2040 will require both organic growth and large-scale M&A beginning in fiscal 2028." (Reporting and editing by Jamie Freed, Tomaszjanowski and Jamie Freed; Kentaro Okasaka and Yuka Obayashi)

(source: Reuters)