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1) China's leading copper producers are seeking higher processing fees, known as treatment and refining charges (TC/RCs), from Freeport, surpassing the rates settled between Antofagasta and Jinchuan Group. TC/RCs are vital for smelters, impacting their profit margins, especially during tight concentrate supplies. Antofagasta recently agreed to TC/RCs of $80 per metric ton, or 8 cents a pound for part of its 2024 copper concentrate supply to Jinchuan Group, falling short of the expectations of top Chinese smelters like Jiangxi Copper, Tongling Nonferrous Metals Group and Yunnan Copper. These companies, accounting for over 45% of China's refined copper production, aim for mid $80s during a forthcoming meeting with Freeport. China's Copper Smelters Purchase Team (CSPT) urgently convened, dismissing the Antofagasta-Jinchuan deal as a benchmark for global contracts. Initially targeting a rollover of $88 or 8.8 cents, CSPT's desired rates were set based on the prior agreement between Freeport and Jiangxi Copper last year.
While Freeport's TC/RCs historically set the global benchmarks, uncertainties loom due to its impending export permit expiration for the Grasberg mine in Indonesia in May. This situation might impact Freeport's 2024 sales, potentially affecting its ability to establish a global reference for TC/RCs. Efforts by Chinese smelters to secure higher processing fees from Freeport underscore the critical role these charges play in the copper industry and highlight the complexities surrounding benchmark agreements amid fluctuating market dynamics and supply constraints.
Source: Top Chinese smelters seek higher fees than agreed by Jinchuan to process copper | ロイター (reuters.com)
2) Chile's Codelco, the world's leading copper producer, announced the successful extraction of ore from the Rajo Inca project, a significant milestone for the initiative, which is over 60% completed. Rajo Inca is slated to commence full-fledged operations in the coming year. This project primarily aims to prolong the operational life of Codelco's Salvador mine located in northern Chile. Facing a 25-year low in copper production, Codelco is heavily investing in what they term "structural projects," with Rajo Inca being a pivotal part of this revitalization strategy. The extraction of ore marks a crucial phase in Rojo Inca project's timeline, as it progresses toward commencing metal concentration by March of the following year, as stated by Codelco. The mine's concentrator plant is expected to gradually increase processing capacity over seven months, targeting an output of 37,000 metric tons of ore daily, illustrating the company's commitment to ramping up production. Codelco's focus on strategy initiatives like Rajo Inca signifies its efforts to overcome the challenges faced in copper production, enhancing efficiency, and extending the life cycle of existing mines. This move reflects the company's determination to address the prolong slump in copper output and marks a significant step toward revitalizing its mining operations.