Japan’s PPC and Lundin Mining remain steady on 2026 rates to avoid a crisis

According to media reports Pan Pacific Copper has agreed with Lundin Mining (TSX:LUN,OTC:LUNMF) to roll over its handling and refining costs to 2026 rather than cutting them further.

People familiar with the deal say commercial terms will remain largely unchanged from this year, while maintaining a fee structure that has already fallen to historic lows.

TC/RCs, the fees miners pay to smelters to process copper concentrate, tend to move in tandem with global supply trends.

But the collapse this year has been so severe that spot charges have turned decisively negative. Many smelters warn that the industry is near a breaking point, especially in Asia, where Chinese refineries have built capacity well ahead of available concentrate.

Lundin’s switch to PPC deviates from the broad expectation that reimbursements will fall further next year.

It follows a warning in October from Freeport-McMoRan (NYSE:FCX)) that it plans to abandon its traditional benchmark-setting system to keep smelters afloat.

The arrangement also suggests that miners with long-standing industrial ties to Japan are willing to make commercial concessions to avoid further financial stress for their customers.

A spokesperson for Lundin declined to comment on the deal. PPC said it could not comment on the details of individual contracts.

For decades, annual copper contracts have been anchored by the first major deal of the year, often involving Chinese smelters since the 2010s.

But the system has come under pressure as the benchmark collapses and Chinese refiners resist setting a price that could turn negative. This year’s benchmark was set at a record low of $21.25 per tonne and 2.125 cents per pound.

The dynamics are particularly complex for Japanese smelters. PPC’s parent company, JX Advanced Metals (OTC Pink:JXAMY,TSE:5016), has a 30 percent stake in Lundin’s Caserones mine in Chile, meaning both parties have a long-term interest in keeping operations stable.

Last month PPC announced a plan to merge his purchasing and sales positions at Mitsubishi Materials, a move aimed at strengthening Japan’s collective purchasing power in a challenging market.

The pressure is most acute in China, where this year’s negative TC/RCs have prompted emergency supply-side intervention.

The China Smelters Purchase Team, which represents the country’s largest refineries, recently decided to cut production by more than 10 percent next year to counter what it called “malicious competition.”

According to Shanghai Metals Market, the CSPT has also established new oversight mechanisms to monitor purchasing practices and blacklist suppliers deemed disruptive.

With Chinese smelters at an impasse over the 2026 benchmark, the industry heads into the new year with no clarity on where the market will settle.

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Securities Disclosure: I, Giann Liguid, have no direct investment interest in any company mentioned in this article.