Last Updated on 07/10/2026
Chinese copper smelters ended September effectively paying miners more than $230 per tonne for concentrate. The unusual situation is not necessarily a sign of a copper shortage. Instead, it reflects tightening availability of the silver-bearing ore used by smelters, a development that could be supportive for silver prices.
Normally, a treatment charge is the fee a smelter receives for processing mined ore into refined metal. When that charge turns negative, it means smelters are competing aggressively for available concentrate and are effectively paying miners a premium to secure supplies. Copper concentrate is particularly important to silver investors because it contains silver that can be recovered during the refining process.
This trend is modestly positive for silver over the next year. Mines responsible for more than one-quarter of global silver production are producing less of the type of ore that contains silver. However, the overall impact remains limited. Our estimate suggests the potential silver supply affected represents roughly one-quarter of this year’s projected market deficit, and that estimate declined following the latest July data.
Silver has also faced pressure from higher interest rates. The metal was trading around $61.14 an ounce on October 6, according to USAGOLD’s daily report, while gold stood at $4,156.30. Silver remains roughly half its January peak. The Federal Reserve raised interest rates on September 16 for the first time since 2023, while the 10-year Treasury yield has climbed close to levels last seen in 2002. Although September’s US jobs report showed only 29,000 new jobs, long-term bond yields continued to rise. The situation in copper mining adds another dimension to the silver supply outlook.
What Negative Treatment Charges Reveal
Most mined copper is transported from mines to smelters in the form of concentrate. Chinese smelters account for a significant share of the processing market and convert this material into refined copper.
Under normal conditions, smelters charge miners a treatment fee for processing concentrate. However, data from the Shanghai Metals Market (SMM) show that the fee has moved below zero, meaning smelters are effectively paying miners to secure the ore.
The SMM index reached what the organization described as a record low on September 18. By September 30, the treatment charge had declined even further to minus $231.68 per tonne.
Such deeply negative treatment charges are a strong indication that copper concentrate is in short supply. Smelters are competing with one another for limited quantities of available ore.
Why the Ore Matters for Silver
Copper is generally produced from mines in two main forms. The first is concentrate, which consists of crushed ore that is processed by smelters. This material can contain silver, allowing the metal to be recovered alongside copper. The second is leached cathode, where copper is extracted from rock using acid and then plated directly. Unlike concentrate, this process does not provide silver as a byproduct.
Earlier analysis highlighted how copper producers have increasingly relied on leaching, a process that increases copper production without generating additional silver. The latest International Copper Study Group data through July show the same pattern. Global copper mine production declined by 1%, while concentrate production fell by 2%. At the same time, leached cathode production increased by 3.6%.
Chile, the world’s largest copper producer, has contributed to the decline. Its mining output dropped 11.7% year over year in August. Chile’s national statistics agency attributed the decline partly to falling ore grades at major mines and the impact of severe storms in July.
Labour Disruptions Could Tighten Supply Further
Labour disputes at two major Chilean copper operations could add further pressure to concentrate supplies.
Escondida, the world’s largest copper mine, temporarily suspended operations following the death of a worker during maintenance. The mine began restarting on September 24, according to SMM. However, its supervisors’ union subsequently rejected BHP’s contract proposal and voted in favour of strike action. Under Chilean law, the dispute must first go through a government-led mediation process.
Meanwhile, at Antofagasta’s Centinela mine, 98.73% of union members voted to strike. The union estimated that a legal strike could begin on October 13 if negotiations fail.
Any prolonged disruption at either mine would likely reduce copper concentrate production and could further tighten the supply of silver-bearing ore.
How Much Silver Could Be Affected?
According to Metals Focus and the Silver Institute, copper mines produced approximately 237.3 million ounces of silver in 2025, representing around 28% of global mined silver.
If the 2% decline in copper concentrate production were applied to that silver supply, the implied reduction would be approximately 4.75 million ounces annually.
Lead and zinc mines remain the largest sources of mined silver. Including the previously estimated range for those metals produces a potential impact of roughly 11–12 million ounces. However, these numbers should be viewed as estimates rather than measured reductions in silver production. They are based on the assumption that silver output moves broadly in line with copper, lead and zinc production.
There is also an important counterpoint: refined copper itself remains abundant. Inventories held on major metal exchanges reached their highest level since June 2003 at the end of August. Therefore, the immediate shortage is not a shortage of finished copper but a shortage of the concentrate required by smelters.
What It Means for Silver Investors
Silver is predominantly produced as a byproduct of other metals, and copper mines account for more than one-quarter of global mined silver. As smelters compete aggressively for concentrate and treatment charges move deeply negative, the scarcity of silver-bearing ore becomes increasingly important for the silver market.
The development provides a modestly bullish signal for silver over the next twelve months because mine supply cannot be increased quickly simply because prices rise. However, the impact should not be overstated.
The estimated 11–12 million ounces of potentially affected silver is derived from production data rather than directly measured losses. Furthermore, the estimate decreased after the latest July figures were released. New labour disruptions at Escondida or Centinela could nevertheless increase the potential supply impact.
Metals Focus and the Silver Institute expect the global silver market to record a 46.3 million-ounce deficit this year, marking a potential sixth consecutive year of supply shortfalls. The shortage of copper concentrate will not create that deficit by itself, but it could make it more difficult for silver miners to produce enough additional metal to close the gap.
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