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By Polly Yam
HONG KONG, Dec 15 (Reuters) - China’s top integrated copper producer Jiangxi Copper and Chilean miner Antofagasta Minerals have agreed 2016 treatment and refining charges 9 percent lower than this year’s fees, as global mines cut output due to low prices.
Jiangxi Copper and Antofagasta, a division of Antofagasta Plc, have agreed 2016 treatment and refining charges (TC/RCs) at $97.35 a tonne and 9.735 cents a pound, a Jiangxi source with direct knowledge of the talks said on Tuesday.
The charges agreed to for term copper concentrate shipments next year are 9 percent lower than benchmark TC/RCs of $107 a tonne and 10.7 cents a pound in 2015, a 10-year high.
Antofagasta officials were not immediately available, and a senior company executive did not immediately reply to a Reuters email seeking comment.
TC/RCs are paid to Chinese smelters by sellers to convert raw material copper concentrate imports into refined metal and are deducted from the smelters’ purchase prices.
The Jiangxi Copper source said the Chinese smelter reached the agreement with Antofagasta on Tuesday morning Beijing time, after 14-hour talks with the Chilean miner in New York.
The agreed charges were likely to be followed by other Chinese smelters and should be the benchmark for 2016 in China, the source said.
“We had no solution (but to accept the lower TC/RCs) ... miners are all saying that the TC/RCs should be below $90/9 cents because metal prices are low,” the source told Reuters.
He said Jiangxi, as well as other large Chinese smelters, had expected the TC/RCs to hold above $100 and 10 cents for 2016 because they expect a surplus in the global concentrate market next year.
Still, copper prices have hovered around six-year lows over the past few months, prompting some global miners to cut output, which could reduce concentrate supplies next year.
“The Chinese smelter accepting the lower TC/RCs reflects mounting worries that global mine output cuts could deepen,” said an executive at a medium-sized copper smelter in China.
Many Chinese smelters should be able to make profits with the TC/RCs of $97.35 and 9.735 cents, the executive said.
Reporting by Polly Yam; Editing by Tom Hogue