Top Chinese smelters seek higher fees than agreed by Jinchuan to process copper

Jinchuan International Resources

21/11/2023 14:46

By Julian Luk
       LONDON, Nov 21 (Reuters) - China's top copper producers
are looking for higher fees from Freeport for processing the
U.S. miner's concentrates next year, above those agreed between
Antofagasta and Jinchuan Group, four sources with direct
knowledge of the matter told Reuters.
    The fees known as treatment and refining charges (TC/RCs)
form a key component of copper smelters' income for converting
copper concentrate into metal, which typically fall and squeeze
smelters' profit margins when concentrate supply is tight. 
    Chilean miner Antofagasta  ANTO.L  agreed last Friday TC/RCs
of $80 a metric ton/8 cents per lb for part of its 2024 copper
concentrates supply to Jinchuan Group  2362.HK , China's fourth
largest copper producer. 
    This number, the sources said, falls short of what China's
top copper smelters including Jiangxi Copper Co.  600362.SS ,
Tongling Nonferrous Metals Group Co.  630.SZ  and Yunnan Copper
Co.  878.SZ  are expecting. 
    The three companies, which produced more than 45% of China's
refined copper totalling 10.4 million tons, will have a meeting
with Freeport  FCX.N  this week with the aim of securing TC/RCs
somewhere in the mid $80s/8 cents, the sources said.        
    Jiangxi Copper, Tongling and Yunnan Copper did not respond
to a request for comment on the issue. Freeport did not respond
to request for comment.
    China's Copper Smelters Purchase Team (CSPT) called for an
urgent meeting last Saturday, a source with direct knowledge of
the discussion said. 
    "The group refused to acknowledge the deal between
Antofagasta and Jinchuan as a benchmark for global contracts." 
    CSPT initially aimed for a rollover at $88/8.8 cents, which
was agreed between Freeport and Jiangxi Copper last year. 
    As one of the world's largest copper miners, the TC/RCs
Freeport agrees with Chinese smelters has for years been used as
a benchmark for contracts worldwide. 
     However, Freeport's 2024 sales could fall short of levels
needed for a global reference, with its export permit for its
flagship Grasberg mine in Indonesia expiring next May. 
    

 (Reporting by Julian Luk; editing by Pratima Desai and David
Evans)
 ((julian.luk@thomsonreuters.com; Reuters Messaging:
julian.luk.thomsonreuters.com@reuters.net))