UPDATE 1-Spot Copper Refining Charges Seen Low in 2010

HAMBURG, June 8 (Reuters) - Global spot copper concentrate treatment and refining charges (TC/RCs) are likely to stay low in 2010 and beyond, a senior executive of U.S. copper mining and smelting group Freeport-McMoRan Copper and Gold (FCX.N) said on Tuesday.

Spot TC/RCs, the fees paid to smelters by mines to refine copper concentrate into metal, are currently "well, well below" the levels for long term refining contracts, said Freeport-McMorRan senior vice president marketing Javier Targhetta on the sidelines of the Copper 2010 conference.

He declined to give a number for spot market levels. Smelter capacity is larger than concentrate output, forcing smelters to compete heavily for available concentrate supplies, he said.

Global copper concentrate supplies were currently about 1.5 to 3 million tonnes below smelter capacity, he said. This reflected between 500,000 to 1 million tonnes of refined metal output.

The sharp increase in smelter capacity in recent years, especially in China, was contributing to weak TC/RCs, he said.

Copper TC/RCs have been falling in past months in the key Chinese market and globally.

"The shortfall in concentrates is expected to continue through 2012 and beyond as planned smelter expansion outpaces new mine developments," he said. "The result is a continuous downward pressure on TC/RCs."

The fall in TC/RCs was a major problem for smelters. Spot levels had now fallen to below four percent of copper prices or an all time low, he said.

"Profits in the copper smelter/refining business have now declined so much because of over capacity," he said, adding that any major cost increases for the refining sector could have a "serious impact on competitiveness."

Calls for voluntary cutbacks in smelter capacity were unpractical, he said. "There would be strike breakers."

Some smelters were raising use of copper scrap as a feedstock but it was unclear how far this could help smelters, he said.

SPANISH COPPER EXPORTS SURGE

Spanish copper smelter Atlantic Copper, owned by Freeport, was raising exports to between 20-25 percent of output in 2010 from between zero to 10 percent in past years to compensate for slack Spanish copper demand said Targhetta, who is also CEO of Atlantic Copper.

Atlantic Copper was running at full capacity despite low demand in Spain, he said. The plant produces about 250,000 tonnes of copper annually.

"Demand in Spain is still weak so we are raising exports," he said. "There is a recovery in copper demand in north Europe but not so much in south Europe."