AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
Despite increasing pressure on Chinese smelters, the country’s copper production is expected to hit a new high this year. Although processing fees have significantly decreased, leading to severe losses, the industry continues to expand its capacity. The government is reviewing expansion plans and intends to impose restrictions on new facilities. However, factories that are already operational will not be affected, which may drive an increase in production this year and next.
According to a survey of smelters, refined copper production in the world’s largest copper-producing country is expected to grow by approximately 4.9% to 12.4-12.45 million tons by 2025. This is faster than last year’s growth rate of 3.1%.
Meanwhile, data shows that smelting fees for ore spot have turned negative, with companies incurring over $20 per ton of concentrate processed, marking the worst profit margin on record. In August 2023, they were charging close to $90 per ton.
China’s copper consumption growth remains steady, with the use of renewable energy far offsetting the decline in copper demand caused by the downturn in the construction industry. Smelters are considering operational adjustments to mitigate losses. A typical solution is to use more scrap copper as a substitute for concentrate.
Earlier this year, trade friction triggered by tariffs boosted gold demand, with investors flocking to Canadian gold mining stocks, making gold the preferred safe-haven asset. However, as expectations for increased metal demand in China rise, investors are beginning to look for other winners, with copper mining emerging as a popular new choice.
Greg Taylor, Chief Investment Officer at Purpose Investments, said, “Copper is similar to gold, which has been the most obvious investment choice so far. I think there is a glimmer of hope that China will take stimulus measures. Any measures introduced should have a positive impact on copper mining stocks.”
However, J.P. Morgan has also warned that China’s fiscal stimulus measures may fall short of expectations, which could put pressure on copper prices and reverse recent gains.
