Chile’s Antofagasta inks copper ore supply deals with China smelters

SHANGHAI: Chilean miner Antofagasta PLC has signed contracts to supply Chinese copper smelters with copper concentrate in deals covering at least half of next year, two sources with knowledge of the matter said.

The contracts - with smelters including Jiangxi Copper, Tongling Nonferrous and China Copper - mean Antofagasta has secured China supply deals well before the annual fourth-quarter “mating season” for three years running, as buyers seek feedstock in a tight market.

One smelter source in China, the world’s top copper user, said his company had agreed to take concentrate at treatment and refining charges (TC/RCs) of $56 per tonne and 5.6 cents per lb, adding that other smelters had settled at around that level.

The second source said smelters had all signed up at TCs around the mid-$50s per tonne, although some negotiations were for supply over a 12-month period starting July 2021 and others for the 2022 calendar year.

Both sources declined to be identified as the talks were private.

TC/RCs, a key source of revenue for smelters, are paid by miners when they sell copper concentrate, or partially processed copper ore, to be refined into metal, offsetting the cost of the concentrate itself.

Twelve months ago, Antofagasta inked similar deals for TCs of about $60 per tonne. The charges fall when the market tightens and smelters have to accept lower terms to get feedstock.

Spot TCs in China, as assessed by Asian Metal, are currently at $42.50 per tonne, having risen from a decade low of $30.50 in April after a group of Chinese smelters agreed to cut concentrate purchases this year.