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Freeport, China smelters agree higher copper treatment charges for 2022

Credit: REUTERS/Rodrigo Garrido

Miner, smelters agree TC/RCs of $65/T, 6/5 cents/lb - source

Settlement to snap run of 6 straight drops in annual benchmark

Deal comes after Las Bambas copper mine in Peru stops operations

Adds background, graphic, attempt to reach smelters for comment

Dec 16 (Reuters) - Miner Freeport-McMoRan Inc FCX.N has agreed copper treatment and refining charges (TC/RCs) for 2022 with Chinese smelters at $65 per tonne and 6.5 per lb, a source 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.

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 600362.SS, Tongling Nonferrous 000630.SZ and China Copper, a unit of state-run metals group Chinalco, said the source, 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.

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.

Spot copper treatment charges in China, as assessed by Asian Metal AM-CN-CUCONC, have held steady at $60.50 a tonne for the past three months, having recovered from decade lows of around $30 in April.

Charging up?https://tmsnrt.rs/2WHLTGW

(Reporting by Tom Daly in Southport, England Editing by Matthew Lewis)

((tom.daly@thomsonreuters.com; +86 10 5669 2119;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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