Sumitomo Metal Mining May Keep 10% Copper Output Cut (Update1)

March 4 (Bloomberg) -- Sumitomo Metal Mining Co., Japan's second-biggest copper producer, may maintain a production cut of 10 percent in the year from April 1 because of lower processing fees, a spokesman said.

"We are considering keeping the output cut because of worsening terms of processing fees" to turn raw material, so- called concentrate, into refined copper, Naonobu Hayakawa, a spokesman for Sumitomo Metal Mining Co., said today by phone. "We will announce our formal production plan on April 1."

BHP Billiton Ltd., the world's largest mining company, and Freeport-McMoRan Copper & Gold Inc. won a 38 percent cut in 2010 processing fees from copper smelters as raw material supplies tightened after China expanded smelting capacity.

The Tokyo-based Sumitomo planned to produce 401,000 metric tons of copper cathodes in the year ending March 31. This compared with its Toyo smelter's annual output capacity of 450,000 tons.

The announcement comes after Yoshihiro Nishiyama, director and executive officer at Pan Pacific Copper Co.'s marketing department, said Feb. 26 that the company may maintain output cuts of 5 percent to 7 percent in the next fiscal year after processing fees fell.

Pan Pacific, Japan's top copper producer, may produce 570,000 tons to 580,000 tons in the year starting April 1, Nishiyama said.

Current production is below Pan Pacific's annual capacity of 620,000 tons, Nishiyama said. The company had targeted production of 584,800 tons this year, he said. The company is 66 percent owned by Nippon Mining & Metals Co., a unit of Nippon Mining Holdings Inc., and 34 percent by Mitsui Mining & Smelting Co.

Mitsubishi Materials Corp., Japan's third-largest copper producer, has not finalized production plans for the next fiscal year, said Hisato Matsubara, a company spokesman.