China smelter group agrees to lower Q1 copper charges
The charges tend to fall when ore supply declines and rise when more concentrate is available.
Chilean miner Antofagasta has offered to pay Chinese smelters less than $75 a metric ton in 2024 to turn copper concentrate into metal, 16% below contracts signed last year, two sources with direct knowledge of the matter told Reuters.
A spokesperson for the London-listed miner said Antofagasta “does not comment on copper negotiations”.
The payments known as treatment and refining charges (TC/RCs) are then deducted from the purchase price of the copper metal paid by the smelter to the miner or company that sells the concentrate.
Falling TC/RCs are due to expectations of tight concentrate supplies and new processing capacity, which will squeeze copper smelters’ profit margins.
Antofagasta’s offer is lower than expectations by Chinese smelters, the world’s biggest buyers of mined copper, which are targeting charges similar to the $88 a ton/8.8 cents per pound signed last year for 2023, according to other industry sources.
The annual copper benchmark TC/RCs agreed between Freeport, one of the world’s largest copper miners, and Chinese smelters has for years been used as a basis for contracts worldwide.
But Freeport’s permit to export mined copper from next May still needs to be approved by Indonesia, and its benchmark status for annual contracts has been diluted as its 2024 sales are likely to fall short of levels needed for a global reference.
Other than Freeport’s TC/RCs, the numbers negotiated by other miners such as Antofagasta could be used in industry contracts. But that will be opposed by Chinese smelters that consume nearly half of global copper concentrate supplies, according to industry sources.
Antofagasta, which operates four mines in Chile, has said it expects its copper production this year to come in at the lower end of a range between 640,000 and 670,000 tons. Its forecast for 2024 is for copper production between 670,000 and 710,000 tonnes.
(By Julian Luk and Pratima Desai; Editing by Kirsten Donovan and Bill Berkrot)
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