Jiangxi Copper, Freeport agree to 12.4 pct rise in 2012 TC/RCs
Source：Reuters Date：Nov.21,2011
China`s top copper smelter Jiangxi Copper Co. and global miner Freeport-McMoRan Copper & Gold Inc have agreed a 12.4 percent rise in term treatment and refining charges (TC/RC) for 2012 concentrate shipments, a Jiangxi Copper source said on Saturday. The 2012 TC/RCs have been set at $63.5 a tonne and 6.35 U.S. cents a pound, up from $56.5 and 5.65 cents for full year of 2011 for standard, clean concentrates. "That should be the benchmark for the Chinese smelters and Freeport in 2012," said the Jiangxi copper source with direct knowledge of the terms. He declined to be named because he is not authorised to speak to the press. He said Jiangxi Copper would continue to receive about 100,000 tonnes of term concentrates, the main raw material for the production of refined copper, from Freeport`s mines in 2012, flat from 2011. The firm had already received all term concentrates from Freeport this year. The price rise will be the second straight year the smelter has won higher TC/RCs from the global miner, despite the ongoing strike at Freeport`s Grasberg mine in Indonesia, which this week was extended into a third month to Dec. 15. TC/RCs are paid by Freeport to Jiangxi Copper for converting its concentrate into refined metal and deducted from concentrate sale prices based on London Metal Exchange copper prices . Higher charges, typically seen when supply rises or demand falls in the global market, cut concentrate import prices to the Chinese, the world`s top copper concentrate importer. The source said the rise was acceptable since TC/RCs for spot concentrates were low currently. Spot standard, clean concentrates to China changed hands at TC/RCs of near $40 and 4 cents versus $45-$55 and 4.5-5.5 cents in late September, traders said. Offers were below $30 and 3 cents from international trading firms, down from about $40 and 4 cents last month, after supply fell on strikes at mines in south America and the Grasberg mine in Indonesia in the second half of the year. Jiangxi Copper expects overall supply of copper concentrate in the global market to rise in 2012 and may see a surplus after 2013, as new capacity comes on the stream, the source said. Jiangxi Copper was the first Chinese smelter to agree to the 2012 TC/RCs rates with Freeport. Sources in China said copper smelters, including Jiangxi Copper, would meet global miner BHP Billiton Ltd in the coming weeks for the TC/RCs talks for 2012. In 2011, Chinese smelters for the first time set half-year TC/RCs for term concentrate deliveries with BHP, agreeing to charges set at $72 and 7.2 cents for the first half and $90 and 9 cents for the second half. The smelters face a shorter pricing period in 2012 because BHP may consider switching to quarterly TC/RCs, they said.
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