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BEIJING: China's top two copper producers have signed concentrate supply deals with Chilean miner Antofagasta for the first half of 2020, two sources familiar with the matter said on Tuesday.

Jiangxi Copper Co  and Tongling Nonferrous Metals Group signed the contracts earlier than usual because of concerns about the future supply of copper concentrate, the sources said. Concentrate is partially processed copper ore that is the feedstock used to make refined metal.

Contracts for annual supply are typically not agreed until around the time of the Asia Copper Week conference in Shanghai in November. These early contracts underscore the smelters' desire to secure concentrate supply as competition for ore increases.

The volume stipulated in the deals is unclear.

"I think early negotiation would be a common way because of the tightness of the (concentrates) market," one of the sources said.

That supply tightness has pushed treatment and refining charges (TC/RCs), the amount miners pay to smelters to process copper concentrates into refined metal, lower since the start of 2019.

One of the sources put the TC/RCs that Jiangxi and Tongling agreed with Antofagasta under the contracts at $64 a tonne and 6.4 cents a pound, while the second source gave a range of $64 to $70 a tonne and 6.4 to 7 cents a pound.

A Jiangxi Copper spokesman said he was unable to confirm the deal, while Tongling Nonferrous did not immediately respond to a request for comment. Antofagasta did not immediately respond to a request for comment outside of normal working hours.

Both of the sources said the agreed rates were not a TC/RC benchmark for 2020, without elaborating. Discussions on the 2020 benchmark are likely to start at the LME Week event in London in October ahead of a potential settlement at the Shanghai conference.

The 2019 TC/RC benchmark was agreed last November by Jiangxi Copper and Antofagasta at $80.80 a tonne and 8.08 cents a pound, although spot rates <AM-CN-CUCONC> have recently plunged to as low as $57 a tonne, the lowest since November 2012, amid rising smelting capacity and disruptions to mine supply.

Copyright Reuters, 2019