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

SINGAPORE — 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 with negotiations said on Thursday.

The charges, paid by miners to smelters to process ore into refined metals, are the highest since 2017 and 35% higher than the 2022 benchmark of $65 a tonne and 6.50 cents per pound, due to an expected oversupply of copper concentrate.

“The general view (previously) was around $80-$85 but the sentiment had shifted towards more to 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.

Miners pay TC/RCs to smelters to process copper concentrate into refined metal, offsetting the cost of the ore.

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, and play a significant role in the profitability of both sides.

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.

Meanwhile, Chile’s Codelco said it would extend maintenance work at its Chuquicamata smelter to 135 days, from 90 days initially.

Freeport did not immediately respond to a request for comment. (Reporting by Mai Nguyen in Hanoi Editing by Mark Potter)