A Codelco report breaks down the results of its smelting and refining business between 2022 and 2025, revealing the difficult conditions facing these plants, all operating in the red. Total losses reached US$506 million last year. China’s enormous smelting and refining capacity, combined with less concentrate available for processing, has triggered a global downturn in this market. Some experts are calling for certain facilities to close.
Codelco’s smelting and refining business has not generated profits in recent years. On the contrary, its results have remained in the red, reflecting the reality of a global market under strain.
A document submitted to Congress by Codelco, one of the world’s largest copper producers, shows that the company lost a total of US$1.78 billion between 2022 and 2025, measured on a pre-tax earnings basis. This includes its three smelters—four until 2023, when it decided to close Ventanas—and its three refineries.
Over the past four years, the largest annual loss was recorded in 2023, at US$562 million, while the smallest was in 2022, at US$255 million. Last year, consolidated losses reached US$506 million.
Of all the figures reported over the four years, the only plant to post positive results during the period was the Caletones smelter, part of the El Teniente division, in 2022 and 2023. In the first year, it recorded a positive US$151 million, before profits fell to US$3 million the following year. Caletones reported losses of US$30 million in 2024, which deepened to US$75 million in 2025. During the profitable year of 2022, sales exceeded costs, unlike in subsequent years. It is Codelco’s largest facility, with the capacity to process 1,250,000 tonnes of concentrate annually, and therefore has the highest revenue: US$1.924 billion in 2025. The problem is that costs were higher, at US$1.947 billion.
The situation is the same at the Chuquicamata smelter, which has the second-largest concentrate processing capacity, at 1,050,000 million tonnes [sic]. Last year, its sales totaled US$2.18 billion, while costs reached US$2.32 billion. Over the four years combined, the Chuquicamata smelter lost US$649 million before taxes.
At the Chuquicamata refinery, costs exceeded sales in every year of the four-year period covered by Codelco’s report. In 2025, revenue reached US$3.544 billion, but costs totaled US$3.573 billion.
The Ventanas refinery recorded sales of US$2.497 billion and higher costs of US$2.548 billion. The smelter closed in 2023: it lost US$48 million that year and US$32 million in 2022.
Prices
Codelco’s report provides the prices charged for processing concentrate. Payments received by smelters are summarized in two charges: treatment charges (TCs) and refining charges (RCs).
Codelco’s TC fell last year to US$35 per dry metric tonne of concentrate, down from US$67 in 2022 and US$92 in 2024. Meanwhile, its RC reached 3.5 cents per pound of payable copper last year, compared with 9.2 cents in 2024.
Patrick Cussen, President of Celta Consultores, explains: “If I had to give a range for the market over the past 20 to 25 years, the average would probably be between US$70 and US$110 for treatment charges and 7 to 11 cents for refining charges. The refining charge is always 10% of the treatment charge.”
A global market in the red
The figures reveal a situation that extends beyond Codelco and reflects a trend in the global smelting and refining market following the dramatic rise of the Asian world power, China. Its smelting capacity has driven prices for both processes to rock-bottom levels worldwide.
Álvaro Merino, Executive Director of Núcleo Minero, explains that “global smelting capacity currently stands at around 31 million tonnes, of which 15 million are in China, representing 47% of global supply. This is why the Asian giant has an enormous appetite for concentrates to feed its smelters.” Looking ahead, he says, “smelting capacity is expected to increase by eight million tonnes by 2040, of which three million will be added in China.”
“The global smelting industry faces a complex situation, marked by excess installed capacity relative to concentrate availability. Asia currently accounts for around two-thirds of global smelting capacity and 90% of the new capacity developed over the past 15 years. This has intensified competition, put downward pressure on treatment charges and increased the importance of operational efficiency, scale and technology in maintaining competitiveness,” Codelco sources say.
Meanwhile, Juan Carlos Guajardo, Executive Director of Plusmining, says there is not enough concentrate to supply installed smelting capacity. “This has pushed the charges smelters receive for processing concentrate into negative territory. That means that, instead of charging for processing, in some cases they are finding themselves having to pay for it.” He expects this situation to persist because the market has seen announcements of new plants rather than cuts in treatment capacity.
Regarding the Asian giant, Cussen says that “major investments were made in smelters, increasing capacity enormously. Today, China has massive overcapacity. This has helped push TC/RCs down to extremely low levels, even reaching zero and, more incredibly, moving into negative territory, with the numbers becoming increasingly negative. It is absurd.” He illustrates the situation with a bakery: it is as if the flour used to make a kilogram of bread cost more than that kilogram of bread.
Sources close to Codelco said that “some smelters are paying mining companies to obtain concentrates for processing. This situation reflects the growth in global smelting capacity, which has intensified competition for available concentrates and squeezed business margins.”
GEM CEO Juan Ignacio Guzmán expands on this, saying that “we are seeing negative TCs that could reach minus US$200 per tonne, primarily because there is so much smelting capacity—more smelters than the world’s concentrate supply can support.” He adds that sulfuric acid prices are also high and, because it is a byproduct, smelters are competing for concentrate, purchasing it and paying mines to process it. This, he says, is “in order to produce sulfuric acid and certain byproducts, which is ultimately where they are making money and generating business.”
The verdict
Cussen notes that international smelters, as well as Chilean ones, are posting enormous losses. He therefore suggests closures. “I am proposing that they close, because the losses will be and will remain very large. That does not mean Chile should not produce cathodes or have smelting and refining operations.”
“But if the decision is that it is important for them to exist in Chile, they must be efficient, state-of-the-art facilities with low costs that can compete internationally. Operating with results like Codelco’s makes no sense and results in persistent losses,” he adds.
Guzmán, of GEM, argues that “China’s strategic argument is always important, and I think it is a strategic mistake to abandon a smelter with low margins solely because its margins are low. Obviously, if the smelter generates losses and the refinery generates losses, that is another matter. But if the smelter and refinery generate low margins compared with mining, while providing access to a more liquid market—the cathode market—then keeping them is definitely good business.”
Following the report, Plusmining’s Guajardo offers another criticism. “What makes me very uncomfortable is that this situation has persisted for so many years without the company itself detecting, identifying or at least assessing it and communicating it publicly. This strikes me as a governance failure, yet another example of Codelco’s governance failings, which is a very serious issue,” he concludes.
Potrerillos, halted since June 2025
This week, the condition of the Potrerillos smelter, part of the El Salvador division, became a major topic of discussion in the Chamber of Deputies’ Mining Committee. The facility has been shut down since June 13, 2025, following the collapse of a stack at its sulfuric acid plant. Andrés Pizarro, President of Potrerillos Union No. 2, told lawmakers that repairing the smelter would cost US$150 million, while closing it would cost between US$480 million and US$1 billion.
“What does it cost to repair? The stack, equipment and infrastructure amount to US$80 million, plus additional investment in equipment and everything needed to ensure proper maintenance. Closure costs between 3 and 6.7 times more and turns a strategic asset into a colossal environmental liability. The Potrerillos smelter is a strategic asset, but if we close it, it becomes a colossal environmental liability with a closure cost that could reach US$1billion,” he argued.
According to Codelco’s report, the Potrerillos smelter can treat up to 550,000 tonnes of concentrate. Until 2023, Ventanas had the lowest capacity, at 420,000 tonnes. Potrerillos’ revenue totaled US$371 million in 2025, while its copper cost of sales amounted to US$387 million.
It is one of the operations with the largest deficits in Codelco’s report: the division has lost US$437 million in smelting since 2022 and another US$110 million in refining.
Source: La Tercera