First purchased by Grupo Mexico in 1999, Asarco is in negotiations with union workers to restart the Hayden smelter in Arizona and nearby copper mines.
Asarco, the mining company controlled by industrial conglomerate Grupo México, plans to restart its halted copper smelter in the United States as prices of the red metal hit record highs, two sources with direct knowledge of the company's plans told Reuters .
First bought by Grupo México in 1999, Asarco is in negotiations with union workers to restart the Hayden smelter in Arizona and nearby copper mines, as well as the Amarillo refinery in Texas, the sources said.
Reopening Hayden would boost nationwide supply of the key red metal, which uses twice the amount of refined copper it produces because it has only two domestic smelters: Freeport McMoRan's Miami smelter, in Arizona, and Rio Tinto Kennecott smelter, in Utah.
Sources said recent copper price rallies motivated Asarco to restart Hayden, given the pressing need for copper smelting in the United States. Grupo México, based in Mexico City, declined to comment.
Demand for copper is expected to rise steadily in the coming years, driven largely by the global transition to clean energy and the growing use of artificial intelligence. The recent price increases, however, appears to be driven in part by speculation.
The most traded copper contract at the Chicago Mercantile Exchange (CME, also known as the Comex), has gained 24% since January, hitting a record high of $5.1985 per pound this week.
The rise of Comex, higher than that of the London Metal Exchange and the Shanghai Futures Exchange, was due to a wave of speculation that forced those who had bet on a fall in prices to cover their positions.
Traders, including Trafigura and IXM, have rushed to ship metal to CME warehouses in the United States to cover short positions, but copper produced in China --which smelts half of the world's copper-- cannot be delivered to the CME. Russian copper, which accounts for 60% of LME inventories, also cannot be delivered to the United States.
MOTHBALLED
The Asarco smelter, located about 161 kilometers southwest of Phoenix, Arizona, has not been operating at full capacity for more than four years following a strike by its unionized workforce.
It suffers widespread environmental damage and is considered a "Superfund" hazardous waste dump by the US Environmental Protection Agency.
It was unclear when Asarco plans to officially resume smelting operations, but the company is negotiating now with a union representing mining and smelting workers, according to a source. Asarco is focused on concluding a contract first with the miners and then with the smelter staff, the source added.
Last June, the company asked state and federal authorities for an extension of the smelter's air quality permit, which was set to expire in December.
According to a source, Asarco recently received at its facilities a delegation from Peru, the second largest copper producing country in the world.
Concentrates from Asarco's nearby Ray and Mission mines are now sold mainly to Chinese smelters. When last operational, Hayden had an annual capacity of 300 million pounds (136,078 metric tons) and processed copper mined from the Ray Mine.
By fully resuming operations at the Hayden smelter, Asarco could transform that concentrate into a product known as copper cathode that can be used by its Amarillo, Texas, refinery to make wire rod and other products.
Asarco's copper cathodes of the "RAY" and "ATR" brands could be delivered to Comex for contract settlement.
The plans also highlight the tight global supply of copper concentrates, a form of crushed and floated ore used by smelters to make copper.
Treatment load, an indicator of copper concentrate availability, turned negative for the first time in April.
The United States produced 880,880 metric tons of refined copper last year, according to the International Copper Study Group, although it imported 770,900 metric tons and consumed more than 1.6 million metric tons of refined copper.
