LONDON Polish copper mining and smelting group KGHM Polska Miedź SA is considering investing in a new furnace to process copper scrap, market sources told AMM sister publication Metal Bulletin.
KGHM reportedly discussed whether to proceed with the development of the plant at its annual general meeting June 19.
The company has not yet made a final decision on the type of furnace it will build, and it is possible that it will look to develop a plant that will give it a foothold in the processing of complex secondary raw materials such as e-waste and residues, a source familiar with the matter said. The plant would be unlikely to be brought online before 2016 or 2017, he added.
The decision to proceed with the investment will be made against a backdrop of a significant tightening in the European scrap market, which is making it difficult for existing secondary producers to secure feed.
The global scrap market has been constrained throughout the year as scrap generation has dropped in industrial and consumer sectors. In addition, availability has dropped sharply since April in response to lower primary copper prices on the London Metal Exchange.
And supply to the Chinese market has been hurt by Operation Green Fence, with customs authorities holding back or rejecting copper scrap consignments heading into the country (amm.com, May 16). Several secondary producers in China have announced plans to close capacity due to the critical shortage of scrap there.
While the European supply situation is less critical than in China, market sources still questioned whether adding new secondary capacity in the region is wise, given that producers are already competing fiercely for material.
Unless LME prices rebound and spur scrap collectors to release more material to the market, availability this year will be worse than it was in 2009, when LME prices collapsed, market sources predicted.
While choosing to invest in a furnace that can treat complex raw materials will help to broaden its supply base, KGHM may still find it difficult to carve out a position alongside established competitors such as Hamburg, Germany-based Aurubis AG or Stockholm-based Boliden AB, market sources suggested.
The company may, however, have an advantage in sourcing scrap in the eastern European markets, sources said.
Lubin, Poland-based KGHM did not respond to a request for comment.
A version of this article was first published by AMM sister publication Metal Bulletin.