Reuters reported that Sumitomo Metal Mining Co had been unable to agree an annual contract to buy copper ore from BHP Billiton in 2012, with talks on processing fees having broken down.

Japanese firms normally purchase more than 200,000 tonnes of copper a year from BHP Billiton, which owns the world's No.1 copper mine, Escondida in Chile, out of total imports of some 1.3 million tonnes.

An industry source said that BHP is seeking treatment and refining charges below the levels earlier agreed by Freeport McMoRan Copper and Gold after a strike at its Grasberg mine in Indonesia caused a supply disruption on the global market, making talks with Japanese smelters difficult.

Freeport McMoRan Copper and Gold agreed a term TC/RC of USD 63.5 a tonne and 6.35 US cents a pound for clean, standard copper concentrate for delivery in 2012 with major Chinese smelter Jiangxi Copper and Japanese smelter Pan Pacific Copper.

The fees are a 12.4% increase from the 2011 charges.

Trade and smelter sources said that this month, BHP and Chinese copper smelters settled 2012 term copper concentrate treatment and refining charges of $60 a tonne and 6 US cents a pound.

Japan's biggest smelter, Pan Pacific Copper said that it was still in talks with BHP on an annual contract for 2012, but negotiations had been delayed due to the halting of operations at its 200,000 tonnes a year Saganoseki smelter in southeast Japan after a fire.

(Sourced from Reuters)