Vedanta pays $246 million to regain Zambia copper mines
The metals and energy major plans to ramp up copper production from the mines to 300,000 tons a year and cobalt output to 6,000 tons.
Miner Freeport-McMoRan Inc has agreed copper treatment and refining charges (TC/RCs) for 2022 with Chinese smelters at $65 per tonne and 6.5 cents per lb, two sources with knowledge of the matter said on Thursday.
The 2022 charges are 9.2% higher than this year’s benchmark of $59.50 per tonne and 5.95 cents per lb and signal the end of a run of six consecutive drops in the annual TC/RC benchmark since 2015.
It is also set to be the highest benchmark since $80.80 for 2019, Reuters records showed.
Miners pay TC/RCs to smelters to process copper concentrate into refined metal, offsetting the cost of the ore. The TC/RC benchmark, referenced in supply contracts globally, is usually taken from the first settlement between a major miner and a smelter in top copper consumer China in annual negotiations.
The smelters that have so far signed up are Jiangxi Copper , Tongling Nonferrous and China Copper, a unit of state-run metals group Chinalco, said one of the sources, who declined to be identified as the talks were private.
Phoenix, Arizona-based Freeport and the smelters did not immediately respond to requests for comment.
TC/RCs rise when more supply is available and smelters can demand better terms on feedstock, and play a significant role in the profitability of both sides.
“(It’s a) good number for the miners. We expected high $60s,” said a Chinese smelter source.
Reuters reported last week that the two sides were $8 a tonne apart on where they would like the treatment charge benchmark to be, with smelters seeking around $69 a tonne and miners $61.
Analysts expect the tight copper mine supply seen in recent years to ease in 2022, although the shutdown on Wednesday of the Las Bambas mine in Peru, which produces around 2% of the world’s copper, could significantly alter market balance projections.
“We were looking for a lower number. The market looks very tight for most .. of next year,” said a source with another miner.
Spot copper treatment charges in China, as assessed by Asian Metal, have held steady at $60.50 a tonne for the past three months, having recovered from decade lows of around $30 in April.
(By Tom Daly; Editing by Matthew Lewis and Lincoln Feast)
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