Copper Concentrates Shortage is Probably Smaller This Year, Freeport Says

Oct 14 (Bloomberg) --The copper concentrate market will have a shortage of less than 100,000 metric tons this year, down from a forecast of 500,000 tons to 1 million tons made in June, because of cutbacks in demand from smelters, said Javier Targhetta, Freeport-McMoRan Copper & Gold Inc.’s senior vice president of marketing and sales.

Production disruptions resulted in less smelting capacity available, Targhetta said in an interview in London yesterday. Targhetta is also president of Freeport’s Atlantic Copper. Concentrate is the raw material from mines that is used to produce copper.

Southern Copper Corp. said Sept. 9 it declared force majeure at its La Caridad plant after a group of former workers blocked access to the property. Force majeure is a legal clause allowing producers to miss contracted deliveries because of circumstances beyond their control. In India, Sterlite Industries (India) Ltd., the nation’s largest producer, is being allowed to operate its only smelter until Oct. 18 as the country’s highest court seeks details on a lower court’s ruling ordering the plant to close for breaching environment standards.

The concentrates shortage may worsen to about 800,000 tons a year for the next two or three years as smelters expand, Targhetta said. Global smelting capacity is expected to increase 10 percent, whereas mining capacity may expand 5 percent, Targhetta said.

Atlantic Copper’s plant in Huelva, Spain, will produce 255,000 tons of copper cathodes next year, down from 260,000 tons this year because of maintenance work, he said.

The concentrates shortage will keep next year’s annual fees that mining companies pay smelters to turn ore into metal at the same or lower levels as this year, he said. The fees were about $46 a ton for treatment and 4.6 cents a pound for refining this year, he said.

"I don’t see any reason” for rates to go higher during annual negotiations that started this week in London, he said.