The front end of the copper value chain is made up of three distinct sectors. Miners, who extract naturally occurring ores and convert them into 'concentrates' (made up of roughly one third copper, one third sulphur and one third iron silicate). Copper producers, usually referred to as smelters and refiners, convert concentrates, imported intermediate materials and end of life scrap into copper metal. Semi-fabricators then convert this metal, along with clean scrap, into products, such as wire-rod, tubes, sheet and strip, for use down the value chain. The number of companies who operate in all three of these sectors is extremely limited.
The copper flow model
A comprehensive study of the stocks, flows and recycling rates for copper has been developed by the Fraunhofer Institute. This complex, three-year study has resulted in an improved understanding of how copper is used and re-used by society.
European copper stocks and flows 2010 (Glosser, 2013)
In 2011, around 855,000 tonnes of copper (source: BGS) were mined within the EU, accounting for around 20% of final end use demand. The main EU mine sites are in Poland, Portugal, Spain and Sweden. Click here to see the locations of copper deposits in Europe.
Producers (smelters and refiners)
In 2011, the EU27’s refined copper production was 2.7 million tonnes, representing 14.7% of worldwide production (source: ICSG). The main production sites are in Germany, Poland, Spain, Sweden, Finland, Belgium and Bulgaria. The final products from the smelting and refining process (copper cathodes) are made through electrolytic processes. These are usually melted and cast, on site, into shapes, referred to as billets and cakes.
About 45% of raw material supplies to the EU27’s copper refineries are purchased, on the international market, in the forms of copper concentrates, blister, anodes and scrap. The remaining 55% comes from EU-based mines, copper-bearing residues and scrap.
With metal prices being global, and discovered on a transparent basis through global commodity exchanges, such as the London Metal Exchange, the competitiveness of EU producers is directly related to their cost base. Higher energy prices, environmental abatement and social costs have made it increasingly difficult for EU producers to compete, on the global market, for the primary and secondary (scrap) raw materials they need. While this is partly due to copper mining countries integrating downstream into their own smelting and refining facilities, the main cause is the strong demand from producers in Asia, many of whom receive state support, or operate under a less strict regulatory umbrella.
Today, six companies employ around 10,000 people across a dozen EU refineries. Only two companies’ refineries are partially integrated with their own mining operations.
The products of the refineries (cathodes) are the major raw materials for the manufacturers of semi-fabricated products. With an output of more than 150% of the EU refinery output (was 200% back in 2005/2006), semi-fabricators need to import cathodes and/or secure access to a significant amount of 'clean' scrap – in the range of 1 million tonnes per year.
In part due to the continued weakness in the construction sector, the 2012 production of semi-fabricated copper and copper alloy products was around 4.3 million tonnes (source, ICSG). This is slightly less than one fifth of worldwide production. Germany, Italy and France account for around half of the EU27 output. The range of semi-fabricated products is very wide and consists primarily of rods, profiles, wires, tubes, sheet and strip. Applications are even more diverse, covering sectors such as electrical engineering, automobiles, construction, machinery, shipbuilding, aircraft, precision instruments, watches and clocks.
The electrical wire-rod sector accounts for around half of the semi-fabricated production. Some 20 companies employ around 3,000 people in total. This sector has a mix of producers – some are integrated upstream with a refinery, others are integrated downstream within a wire and cable producer, while a third category are independent. With both metal and rod prices being linked closely to commodity exchange prices, this is a highly competitive sector with energy and social costs being of critical importance.
Many more companies operate in the semi-fabricated products sector. About 80 companies, employing some 35,000 people throughout the EU27, produce copper and copper alloy rods, bars, wires, sections, tubes, plates, sheet and 30 companies have integrated foundries for the production of cakes, billets and other shapes for further processing. The others purchase their requirements on the merchant market.
Many metals can be used in copper alloys. There are estimated to be over 500 different alloys available in the EU market place. The most common alloying elements are zinc, nickel, lead, tin, silver and beryllium. Each alloy offers tailored performance to the downstream customer both with regards to final product use and the economics of processing.