SHANGHAI, May 20, 2011 (Dow Jones Commodities News via Comtex) -- Chinese copper smelters are yet to begin negotiations to fix second half treatment and refining charges, but would push for the rates to be fixed around the current spot rates, a senior Chinese industry official said Friday.
"Talks with BHP (Billiton Ltd.) haven't started, although we hope to settle at a reasonable price for the second half of this year," said Chief Financial Officer and Executive Director of Jiangxi Copper Group, Gan Chengniu.
Speaking on the sidelines of an industry conference, Gan said it would be "ideal" if term copper processing charges agreed between Chinese copper smelters and BHP Billiton are close to the current spot levels.
Copper treatment charges and refining charges, or TC/RCs, are fees paid by miners to smelters for processing concentrate into refined metal and represent a main source of revenue for smelters. TC/RCs tend to rise when concentrate supply is strong or when smelters keep operation rates low, to cut output.
The comment was made after news Thursday that Japanese smelter Pan Pacific Copper, a bellwether for the industry, settled term TC/RCs with BHP Billiton at $90 per metric ton for the second half of the year.
That was lower than current spot TC/RCs of above $100/ton, little changed from April levels, but much higher than the $70-$80/ton before the March 11 earthquake in Japan.
Global miners usually conduct annual contract negotiations with Chinese smelters including Jiangxi Copper Co. (0358.HK) and Tongling Nonferrous Metals Group Co. (000630.SZ), as well as smelters in Europe and Japan at the start of the year. This year, however, BHP chose to sign half-yearly deals with Asian smelters, making a second round of negotiations necessary.
Chinese smelters had settled first half TC/RCs with BHP between $72/ton and $77/ton, with Jiangxi securing the highest rate of $77/ton, a 65% increase from the 2010 level of $46.5/ton.
In comparison, full-year TC/RCs with another global miner, Freeport McMoRan Copper & Gold Inc.(FCX), were settled at $56.5/ton.