Smelter slaps higher refining charges
November 22, 2013
by: Yuka Obayashi
Tokyo (Reuters) – Pan Pacific Copper, Japan’s biggest smelter, won its highest copper processing fees in eight years in a deal with US miner Freeport-McMoRan Copper & Gold Inc, reflecting an anticipated growth in mine supply.
The treatment and refining charges (TC/RCs) for Freeport were set at $92 per tonne and 9.2 cents per pound respectively, up 31 percent from $70 and 7 cents for 2013, a Pan Pacific spokesman said.
The charges are similar to what Freeport has agreed to pay to smelters in top copper consumer China.
Miners pay TC/RCs to smelters to convert concentrate into refined metal, with charges deducted from the sale price. The charges typically rise when supply increases.
The agreed TC/RCs with Freeport marks the highest for Pan Pacific since $95/T, 9.5 cents/lb in 2006, the spokesman said.
They also come above $80/T and 8 cents/lb offered by Anglo-Australian miner BHP Billiton to Japanese copper smelters earlier this month.
Higher fees will likely help improve earnings of Pan Pacific, the world’s third-biggest copper smelter, and its parent JX Holdings Inc which forecast a 6 percent year-on-year drop in net profit for the year ending March 2014.
Pan Pacific has said that it was aiming to raise the processing fees it charges sellers of raw material concentrate in 2014 by more than 35 percent to $95/T, 9.5 cents/lb as it cashes in on rising mine supply.
It will continue talks with other global miners with an aim to sign agreements by Christmas.
Other Japanese smelters such as Sumitomo Metal Mining Co. Ltd. and Mitsubishi Materials Corp declined to comment on the fee negotiations.
Hiroshi Yao, chairman of Japan Mining Industry Association (JMIA) and president of Mitsubishi Materials, told reporters on Thursday: ‘’I can’t comment on details of the TC/RCs negotiations, but the fees will be reflecting the recent and expected trend of rising ore supply.’’