Miners and smelters still divided on copper processing costs

(Reuters) – Copper miners and smelters are belatedly accepting concentrate processing fees for next year, three sources familiar with the talks said, with smelters seeking a rollover while miners point to a tight market.

Miners pay smelters processing and refining fees (TC/RC) to turn copper concentrate into refined metal.

The first settlement between a major copper miner and a Chinese smelter during the annual mating season usually takes place during negotiations in November and serves as a benchmark for the year ahead.

For 2020, it has been set at $62 a tonne and 6.2 cents a pound by Chinese companies Jiangxi Copper and Freeport-McMoRan Inc, whose Indonesian unit operates Grasberg, the world’s second-largest copper mine.

However, spot TCs, which fall when the concentrate market tightens, are now at an eight-year low of $50.50 a tonne.

“The smelters are aiming for a settlement in the low $60s and the miners are offering…around $50,” said a source involved in the talks, declining to be identified.

A second source, working for a minor and also declining to be named, said the two sides were more than $10 apart on the charges.

Antofagasta and Freeport in Chile are usually the first to agree on fees.

However, a third source involved in the talks said the problem for Freeport is that Grasberg’s concentrate would risk exceeding the maximum permitted fluorine content of 1,000 parts per million, or 0.1%, in the main copper consumer. in China.

“Grasberg will produce a lot more but the concentrates are high in fluoride,” the source said, adding that the chemical impurity essentially limits Grasberg’s concentrate destinations. “It puts them in a weaker negotiating position.”

Freeport did not respond to a request for comment.

“It’s a big challenge for Freeport. (It’s) hanging over negotiations,” said CRU analyst Hamish Sampson.

Grasberg switches from surface mining to underground mining. Freeport Indonesia chief executive Tony Wenas said in June it would produce 160,000 tonnes of ore per day in 2021.

Reporting by Tom Daly and Zandi Shabalala; additional reporting by Shivani Singh; edited by Pratima Desai and Marguerita Choy

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