US investigation opens door for Aussie copper

A recent US court ruling blocking portions of the US Government’s tariffs has had little impact on global copper markets.

While much of the ruling was paused pending appeal, copper was not included in the scope and market participants believe it has little bearing on current trade expectations.

Since February, copper has been under review through a Section 232 investigation launched by the US Government.

This mechanism, previously used to apply 25 per cent tariffs on steel and aluminium, is widely expected to result in a similar tariff on copper, citing concerns over import dependence.

With the London Metal Exchange (LME) operating duty-free and the Chicago Mercantile Exchange (COMEX) operating duty-paid, the threat of tariffs has already created a significant arbitrage opportunity between the two.

On May 30, the arbitrage stood at $US735 per tonne, 20 per cent higher than before the court ruling.

“The news hasn’t affected the arbitrage,” one miner told Benchmark of the court ruling. “It may actually hurry the tariff on copper, so Trump can still achieve what he wants.”

Other sources told Benchmark that the ruling hadn’t impacted market expectation as to whether copper would become subject to tariffs.

Since the Section 232 investigation was announced in February, COMEX copper prices have increased more than six per cent, benefiting Australian copper producers including BHP, which plans to more than double its South Australian copper production by the mid-2030s.

The company is working toward a major expansion of its Olympic Dam smelter and refinery to produce more than 500,000 tonnes per year, supported by key contractors Fluor Australia and Hatch.

“BHP has established a world-scale copper province in South Australia and we are working at pace to progress our plans,” said asset president Anna Wiley.

Alongside Olympic Dam, BHP is leveraging Prominent Hill, Carrapateena and its Oak Dam project.