Bidding Game r he US miners deal with Jiangxi Copper now puts pressure on rival BHP to increase its own offer on the charges
HONGKONG. US miner Freeport-McMoRan Copper Gold lias agreed to pay nearly a third moa in annual processing charges to Chinas leading copper smelters, likely increasing the pressure on rival HUI to raise its own offer on the charges.
The higher charges reflect expectations for growing mine supply pushing the market into a widening surplus next year and keeping a lid on copper prices.
Chinas number one producer, Jiangxi Copper Company, has agreed with Freeport to treatment and refining charges (TC/RC) of $y2 per ton and 92 cents per pound for term copper concentrate shipments in 2014, sources said on Monday, setting the benchmark for the region.
That is 31 percent higher than the processing charges of $70 and 7 cents charged by the smelters from Freeport this year.
Other smelters in China have followed suit and struck similar deals with Freeport.
Miners pay TC/RCs to smelters to convert concentrate into refined metal, with charges deducted from the sale price.
The charges typically rise when supply increases.
"$92 and 9.2 cents should be Chinas benchmark for 2014," said a source at Jiangxi Copper with direct knowledge of the agreement.
The two companies had taken two days to reach a deal on the charges, the source added.
Hut the processing charges are lower than the more than $100 and 10 cents originally sought by Chinese smelters and $115-$1 IS and 11.3-11.5 cents in the spot market in Asia this month.
Freeport, which runs the worlds second-biggest copper mine in Indonesia,did not immediately respond to an e-mail from Reuters seeking comment on the agreed charges sent outside office hours.
Hl lP typically produces high grades and has offered lower charges than Freeport to Chinese smelters in 2011 and 2014. Still, the Anglo-Australian miners opening gambit of $80 and H cents to Chinese smelters last week now looks very low, and it could be under pressure to hike the rate, industry sources said.
BHP is meeting the smelters for second-round talks this week, they said. Reuters
Source : JakartaGlobe, November 19, 2013