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You want to build a metal smelter of your own? Andy Home

The race to secure the critical minerals is opening up new opportunities for countries that have the fortune to possess the right deposits.

The goal is to extract as much value from the metal?riches' in the earth as possible.

The obvious answer is to process the ore. Smelters that convert ore to metal are not only more valuable, but also offer a path to economic and industrial development.

It's a way for Western policymakers to loosen China's grip over midstream capacity in many critical metals.

According to a joint study by the consultancy CRU, and the World Bank, the number of barriers to setting up a successful business in processing is "vast". (Technical and economic feasibility of smelting and refining in developing countries, June 2026).

In order to be profitable during low-price cycles, power supply, infrastructure and logistics are all important.

CONTROL THE ORE

Of course, it helps if you already have the minerals.

Integrating domestic mining with processing helps to build price resilience.

It's hard to be in the zinc or copper smelting industry without a guaranteed source of feed. Spot treatment conditions are not favorable, making non-integrated smelters reliant on revenue streams from by-products to survive.

The ore must be kept at home.

Indonesia is the leader in using raw material bans to force miners to build processing facilities, first for nickel and now for aluminium.

Other people are doing the exact same thing.

Zimbabwe has placed export restrictions on lithium, while Guinea and the Democratic Republic of the Congo have imposed controls on cobalt.

Angola is an interesting exception. It has no bauxite, but it is building a first-stage aluminium smelter at the port of Bara?do dande with a capacity of 120,00 metric tons annually.

Have the Infrastructure

The Angolan project has a deep sea port that is suitable for raw material handling.

The free-trade area is also strategically located, with shared infrastructure and rates for business, as well as reliable power.

Any aluminium smelter needs power at a competitive price. They can consume as much electricity in a single year as an entire city the size Boston.

According to the report, Angolan electricity costs are comparable to global averages. South32? has put its Mozal power plant in care and maintenance because the costs are not comparable to those in Mozambique.

The capacity to store and transport the sulphuric acids generated during the smelting processes is critical for both copper smelters and zinc smelters.

Co-location of copper smelters with large acid users such as fertilizer factories or, as in Zambia, regional mines that use acid as a leaching agent is the most cost-effective.

GET CHINESE HELP

The project's low-cost construction is another advantage.

The capital expenditure (capex), which is estimated at around $2,084 for every ton of aluminum, is higher than the domestic Chinese smelters, but "remarkably" lower relative to the rest the world.

The project uses production equipment that was idled in China.

The Chinese are also leading the massive expansion in Indonesia of aluminium smelting capacities, and it is a similar low capex at under $3,000 per tonne.

Capex is rising for any type of smelter located outside China, due to the soaring costs associated with construction and equipment.

The number of equipment providers has decreased as fewer smelters have been built in Western countries in the past decade. Prices have increased accordingly.

The report's authors note that "Modular equipment with lower specifications and Chinese technology can offer more affordable solutions."

Not everyone is a winner

It is not possible to build processing capacity in a universal way.

The success or failure of a project depends on a range of complex economic, technical, and institutional factors that vary depending on the country and metal.

Zambia has built a successful copper processing capability, but Peru's mining sector and infrastructure are designed to provide raw materials via ocean ports to overseas smelters.

Angola's aluminum project is more feasible that Ghana's hopes to revive its existing Volta Smelter. This project faces high modernisation cost, increased power prices and a lack vertical integration with an Alumina Refinery.

Zimbabwe's lithium reserves are larger than those of Nigeria, but the latter is dependent on small-scale and artisanal mining.

Turkiye’s Siirt Zinc Smelter Project benefits from the strong demand of the thriving country’s steel industry, and from a design which allows it to produce valuable by-products, such as nickel, cobalt, lead and cadmium.

The economics of a site can make a huge difference in the success or failure of a product.

The report concludes that "there is value to capture but developing countries must be careful which?metals they choose, where they locate themselves and what business models are pursued."

The World Bank is interested in hearing from you if you are still?interested in building your own melting plant. The World Bank may be able help.

Andy Home is a columnist at. This column is great! Check out Open Interest, your new essential source for global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.

(source: Reuters)