The new policy requires companies building new smelters to ensure that their mine supply can meet factory needs through full ownership or equity control. This requirement has significantly raised the entry threshold, meaning that only a few large domestic companies may qualify.

The policy was introduced against the backdrop of tight global copper mine supply, as competition in the copper concentrate market has become increasingly fierce due to production disruptions, declining grades and rising exploration costs.

Due to a shortage of raw materials, spot processing fees have fallen to negative values, resulting in losses across the industry and forcing some smelters to consider reducing production.

In October last year, the China Nonferrous Metals Industry Association called for limiting new smelting capacity as a "top priority" and suggested that the copper industry learn from the government's intervention measures in the steel and aluminum industries.

Currently, China's copper smelting industry is heavily dependent on imported concentrates. According to data from the United States Geological Survey, in 2023, about 85% of the copper concentrate used by Chinese smelters came from imports, while China's refined copper production that year was 12 million tons, and domestic copper mining was only 1.7 million tons, accounting for 4.1% of the world's copper reserves.

According to the latest government plan, China plans to increase domestic copper resources by 5% to 10% in the next three years to reduce its dependence on imports. At the same time, the government will encourage smelters to sign long-term supply agreements with global miners, increase imports of copper blister and anode copper, and promote scrap copper recycling to optimize the supply chain of copper resources.

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