Reuters reported that BHP's majority owned Escondida mine and two Japanese smelters and a South Korean smelter have agreed mid term copper concentrate treatment and refining charges of USD 63.5 per tonne and 6.35 cents a pound.

Trade and smelter sources said that the agreement is in line with 2012 annual term contract price set with Freeport McMoRan Copper and Gold late last year.

A source said that BHP initially offered USD 62 per 6.2 cents for concentrates for delivery from July 2012 through June 2013 but was forced to pay higher prices to smelters as production at the Escondida mine in Chile has not been smooth. The mid term fees are high, considering the tightening spot market conditions. BHP had to make up for slower production at the Escondida mine.

An international trading house said that that may be reflecting that BHP is seeing higher TC and RCs. Indian smelters have also received the same mid-year TC and RC. He expected the steady mid year TC and RC would push up spot TC and RCs to around USD 50 in coming months.

Traders said that Chinese smelters which did not participate in the mid year talks this year because they do not hold mid year contracts had received TC and RCs for spot clean, standard copper concentrate imports at TC and RCs of USD 40 per tonne to USD 45 per tonne and 4 cent to 4.5 cents per pound this month.

In January, Japanese copper smelters skipped 2012 term deals with Escondida, unable to agree on fees as the Japanese companies sought fees of over USD 63.5 per 6.35 cents while BHP insisted on lower charges and reached agreement with China's copper smelters at USD 60 per 6 cents.

Copper treatment and refining charges are paid by miners to smelters for converting its concentrate into refined metal and deducted from concentrate sale prices based on London Metal Exchange copper prices. Charges typically rise when supplies are higher or demand falls in the global market.

Source - Reuters

(www.steelguru.com)