Freeport settles six-year high copper charges for 2023 with Chinese smelters

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Miner Freeport-McMoRan has agreed treatment and refining charges (TC/RCs) of $88 a tonne and 8.8 cents per pound for copper concentrate supply in 2023 with Chinese smelters, a source close to negotiations said on Thursday.

The charges, paid by miners to smelters to process ore into refined metal, are the highest since 2017 and 35% higher than the 2022 benchmark, due to an expected oversupply of copper concentrate.

“The general view (previously) was around $80-$85 but the sentiment had shifted more towards the $85-$90 range in recent weeks,” said analyst Craig Lang of consultancy firm CRU.

“It was quite a common view across the market that next year would see a surplus approaching 300,000 tonnes of copper concentrate,” he said.

This year the benchmark was set at $65 per tonne and 6.5 cents per pound, but China’s top copper smelters had already lifted their floor TC/RCs in the fourth quarter to a five-year high at $93/9.3c due to a supply glut.

Spot treatment charges in China assessed by Asian Metal stood at $85.50 a tonne on Nov. 17, up 43.7% from the beginning of this year and higher than the annual benchmark.

The TC/RCs 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.

TC/RCs rise when more supply is available and smelters can demand better terms on feedstock.

“We think the number is not reasonable. Although 88 is a good luck number in China, it is not representative of the market reality,” said a miner.

Smelter executives on Thursday called on miners to pay higher TC/RCs to incentivize them to expand capacity and ensure long-term copper supply to the market.

Market participants have mostly expected the treatment charges benchmark to be in-between $80 and $90 a tonne.

They pointed to Teck Resources’ Quebrada Blanca Phase 2 project in Chile and Anglo American PLC’s Quellaveco project in Peru that would contribute to the rising supply of concentrate.

Freeport did not immediately respond to a request for comment.

(By Mai Nguyen; Editing by Mark Potter)

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