• 18 hours Americans Are Sick Of Unfair Taxation
  • 3 days No Jab, No Job: The New Hardline Policy of U.S. Employers
  • 5 days What’s Included In Biden’s $6 Trillion Economic Plan?
  • 6 days The “Great Car Comeback” Brightens Oil Demand Outlook
  • 7 days The 3 Most Profitable Covid-19 Vaccine Stocks
  • 9 days Beijing Launches Digital Currency To Break AliPay-WeChat Duopoly
  • 10 days The New Economic World Order After Covid-19
  • 14 days 3 Signals To Watch For A Stock Market Correction
  • 16 days Netflix Earnings Red Alert: Subscriptions Could Underwhelm
  • 17 days Wall Street Banks Are Back
  • 17 days Elon Musk’s SpaceX Scores Big Win Over Jeff Bezos’ Blue Origin
  • 18 days Which Country Is The World’s Largest Investor In Batteries?
  • 20 days Are Bitcoin’s Environmental Risks Overblown?
  • 20 days Why The Gold Rush Ran Out Of Steam
  • 23 days Coinbase IPO Explodes, But Fails To Keep Its Momentum
  • 23 days China Slaps Alibaba With Record $2.75B Antitrust Fine
  • 24 days The Pandemic Has Culled The Middle Class
  • 25 days Legacy Automakers See Massive Spike In Sales
  • 26 days Tesla's Biggest Competitor Is Going Cobalt-Free
  • 27 days Stocks That Could Benefit From Biden’s $2.5 Trillion Infrastructure Plan
  1. Home
  2. Markets
  3. Other

Chinese Environmental Crackdown Could Lift Commodity Prices

I’ve been writing the last few weeks about the unfolding metals supply crisis in China. Triggered by a wave of environmental checks at mining and processing facilities across the country. 

One of the big questions is: how much production will be impacted by the environmental crackdown?

And this week, we began to get answers. 

Key producer China Minmetals confirmed Monday that it has been targeted by environmental regulators. With the company saying it will be forced to complete a massive upgrade of its smelting facilities. 

Those smelters are primarily located in the province of Hunan. Where regulators said they found widespread environmental damage at Minmetals facilities located along major waterways. 

Faced with those findings, Minmetals will now launch an upgrading program at its smelters. At a reported cost of 10 billion yuan, or about $1.5 billion. 

Those upgrades will affect Minmetals’ output of copper, lead and zinc. The company didn’t specify exactly how much production will be impacted, but given the financial scale it’s likely a significant amount of output is involved. 

Some or all of that production will almost certainly have to be halted during the upgrading work. Meaning recent supply loses from closures for environmental inspections will now be extended for months. 

That’s going to make Chinese supply of copper and lead/zinc tighter for longer. Meaning we could see continued upward momentum in import demand to fill the gap.  Related: Is OPEC Throwing In The Towel On U.S. Market Share?

It’s also critical to remember: this is just the first firm targeted publicly by environmental regulators. With a fourth round of checks just wrapping up, we could see more firms and facilities being shut for upgrades like these. 

This will continue to be one of the biggest stories for global mining and metals prices. Watch for more news on closures, as well as stats on Chinese metal production and imports.

Here’s to taking a breather.

By Dave Forest

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment

Leave a comment