The plant will be located in the port city of Fangchenggang on the Gulf of Tonkin, the people added, declining to be named due to the sensitivity of the matter. Jinchuan already has a 400,000 tonnes per year copper smelter in Fangchenggang, in which trader Trafigura [TRAFGF.UL] owns a 30% stake.

Trafigura is not involved in plans for the blending plant but local smelter Guangxi Nanguo Copper is, the sources added.

Blending copper concentrate, or partially processed copper ore, involves mixing different types of concentrate to create a suitable feedstock for smelters making refined copper.

The plans for the facility come at a time when coronavirus-related mine closures have left smelters in China, the world's top metals consumer, fretting about raw material supply as treatment charges for copper concentrate languish at their lowest in almost eight years.

(For graphic on Rough treatment: Tight mine supply pushes China copper treatment charges to 8-year low, click: https://fingfx.thomsonreuters.com/gfx/ce/yzdvxnejzvx/roughtreatment.JPG)

More blending capacity could alleviate shortages but the process is controversial in China for environmental reasons as it typically involves importing and mixing "dirty" concentrate containing high levels of impurities such as arsenic.

Some concentrate is blended in Malaysia and Taiwan before cleaner material is shipped to mainland China.

"Having the blending facility on the mainland means saving on logistics costs, so it makes sense," one of the sources said.

"But of course it requires that dirty concentrates can be unloaded on the mainland."

It was not immediately clear what the processing capacity of the new facility would be or when it would start operating.

A Minmetals spokesman said he was unaware of the project.

Jinchuan and Nanguo did not immediately respond to a request for comment.

(Reporting by Tom Daly; Editing by Himani Sarkar)