BHP’s majority-owned Escondida mine and two Japanese smelters and a South Korean smelter have agreed mid-term copper concentrate treatment and refining charges (TC/RC) of $63.5 a tonne and 6.35 cents a pound, trade and smelter sources said on Wednesday.
The agreement is in line with 2012 annual term contract price set with Freeport McMoRan Copper and Gold late last year.
BHP initially offered $62/6.2 cents for concentrates for delivery from July 2012 through June 2013, but was forced to pay higher prices to smelters as production at the Escondida mine in Chile, the world’s biggest, has not been smooth, one source said.
“The mid-term fees are high, considering the tightening spot market conditions,” said a source, who asked not to be identified because the fees are not made public. “BHP had to make up for slower production at the Escondida mine,” he said.
Another source at an international trading house said: “That may be reflecting that BHP is seeing higher TC/RCs.” Indian smelters have also received the same mid-year TC/RC, he added.
He expected the steady mid-year TC/RC would push up spot TC/RCs to around $50 in coming months.
Chinese smelters, which did not participate in the mid-year talks this year because they do not hold mid-year contracts, had received TC/RCs for spot clean, standard copper concentrate imports at TC/RCs of $40-$45 per tonne and 4-4.5 cents per pound this month, traders said.
In January, Japanese copper smelters skipped 2012 term deals with Escondida, unable to agree on fees, as the Japanese companies sought fees of over $63.5/6.35 cents while BHP insisted on lower charges and reached agreement with China’s copper smelters at $60/6 cents.
Copper treatment and refining charges are paid by miners to smelters for converting its concentrate into refined metal and deducted from concentrate sale prices based on London Metal Exchange copper prices. Charges typically rise when supplies are higher or demand falls in the global market.