Chile’s state-run copper producer Codelco and Swiss miner and trader Glencore plc (LON: GLEN) have reached an initial agreement to develop a new copper smelter in northern Chile.
Under Wednesday’s agreement, Codelco will supply the copper concentrate, while Glencore will be responsible for building the facility. Industry analysts estimate the project could require between $1.5 billion and $2 billion in investment. Glencore will conduct a pre-feasibility study, and the companies aim to finalize the full agreement in the first half of next year.
The project, located in the Antofagasta region, would have the capacity to process roughly 1.5 million metric tons of copper concentrate per year.
If the project moves forward, construction could begin in 2030, with operations starting between 2032 and 2033. Codelco said it selected Glencore after a competitive bidding process. The deal would allow Glencore to process up to 800,000 metric tons of Codelco concentrate annually for at least ten years.
Chile currently accounts for only 6 per cent of global copper smelting capacity. Much of the country’s copper is exported to China, which controls around half the world’s smelting output. With Chinese smelters operating efficiently and competing for limited concentrate, treatment charges—the fees miners pay to convert concentrate into refined metal—have fallen below zero in some cases, forcing overseas smelters to close.
The Chilean government has pushed to expand local smelting capacity. State-run company ENAMI is already modernizing a smelter with a $1.7 billion investment. In addition, Codelco Chairman Maximo Pacheco said the Antofagasta location offers logistical advantages, as the region produces most of the country’s copper.
Read more: Codelco record copper premium sparks threats from Chinese buyers
Read more: Analysts forecast surge in copper consumption outside China by 2031
Partnership could help Chile reduce reliance on foreign smelters
Pacheco noted that building the smelter in Chile will follow strict operational and environmental standards. He added that increasing domestic smelting capacity will benefit Codelco while also strengthening the nation’s strategic resources and autonomy.
Analysts said the partnership could help Chile reduce its reliance on foreign smelters. Furthermore, local processing could improve efficiency and lower costs for miners in the long term. Meanwhile, global copper markets are expected to remain competitive, making new smelting capacity increasingly valuable.
Codelco and Glencore did not provide further details on financing or potential partnerships. The companies said they would release updates once the pre-feasibility study is completed.
Investors reacted positively to the deal. Glencore’s shares rose roughly six per cent following the announcement.
Analysts said the project offers Glencore a stable long-term supply of high-grade copper concentrate. In addition, it could improve operational efficiency and lower costs. One report noted that the partnership aligns with rising global copper demand from electrification and clean energy initiatives.
Some investors remain cautious, however. Glencore recently reduced its 2026 copper production guidance due to operational challenges in certain Chilean mines. Consequently, the deal’s success depends on completing a pre-feasibility study and securing financing.
Brokerage platforms currently list Glencore as a moderate buy, with a 12-month target suggesting 6–8 per cent upside. Meanwhile, analysts noted that finalizing the deal could take until the first half of 2026.
The project would allow Glencore to process up to 800,000 metric tons of Codelco concentrate annually for a decade. Furthermore, Chile aims to strengthen domestic smelting capacity, reducing reliance on overseas facilities. Investors said the deal could support both companies’ long-term competitiveness in a tightening copper market.
.
