Shifting global supply chains away from China’s copper industry would require “massive investment” in new facilities, including $85 billion for refining and smelting, research firm Wood Mackenzie said on Thursday.

A report by Wood Mackenzie states that China controls 97 percent of the world’s smelting and refining capacity, representing nearly three million tonnes of production and $25 billion in investment.

Goods manufacturers typically use copper to make cables and appliances, as well as decarbonization equipment.

“As the world’s major economies seek to shift their supply chains for critical minerals outside of China, the resulting inefficiencies could increase the cost of finished products and delay the energy transition,” the report said.

“(China’s) significant investments in the downstream processing and semi-finished products sector pose a significant challenge to global copper supply security.”

Brazil and the United States have their own copper reserves and, because of their stocks, the two American continents are “prepared to play a key role” in reducing risks in mineral supply chains, the US think tank Centre for Strategic and International Studies said in April.

On the production side, India is commissioning a specialty smelter while Indonesia is adding two more, according to Wood Mackenzie.

But China’s copper production is low-cost and meets strict environmental standards, making the factories “extremely competitive,” said Liu Zhifei, senior adviser for copper markets at Wood Mackenzie.

China has half of the world’s capacity to produce copper wire rod, and this capacity is still being expanded, the report adds.

Semi-finished manufacturing – where copper products are partially transported to completion – outside China, such as in Europe, is facing “lower utilization” and higher operating costs, the report said, citing Nick Pickens, the analysis firm’s global head of mining research.

In the US, according to Wood Mackenzie, government incentives “cannot ensure the long-term sustainability of the industry”.

And according to Zhao Xijun, a finance professor at Renmin University in Beijing, it makes little sense for Western politicians to advocate for a decoupling of copper supply chains because “China’s advantage is in manufacturing,” even if some other countries have more raw materials.

“The U.S. idea of ​​decoupling from a low-cost, high-efficiency industry would disrupt the supply chain,” Zhao said.

“Politicians may get away with votes, but industry will lose.”