Top Chinese smelters seek higher fees than agreed by Jinchuan to process copper

By Julian Luk

LONDON, Nov 21 (Reuters) - China's top copper producers are looking for higher fees from Freeport for processing the U.S. miner's concentrates next year, above those agreed between Antofagasta and Jinchuan Group, four sources with direct knowledge of the matter told Reuters.

The fees known as treatment and refining charges (TC/RCs) form a key component of copper smelters' income for converting copper concentrate into metal, which typically fall and squeeze smelters' profit margins when concentrate supply is tight.

Chilean miner Antofagasta agreed last Friday TC/RCs of $80 a metric ton/8 cents per lb for part of its 2024 copper concentrates supply to Jinchuan Group, China's fourth largest copper producer.

This number, the sources said, falls short of what China's top copper smelters including Jiangxi Copper Co., Tongling Nonferrous Metals Group Co. and Yunnan Copper Co. are expecting.

The three companies, which produced more than 45% of China's refined copper totalling 10.4 million tons, will have a meeting with Freeport this week with the aim of securing TC/RCs somewhere in the mid $80s/8 cents, the sources said.

Jiangxi Copper, Tongling and Yunnan Copper did not respond to a request for comment on the issue. Freeport did not respond to request for comment.

China's Copper Smelters Purchase Team (CSPT) called for an urgent meeting last Saturday, a source with direct knowledge of the discussion said.

"The group refused to acknowledge the deal between Antofagasta and Jinchuan as a benchmark for global contracts."

CSPT initially aimed for a rollover at $88/8.8 cents, which was agreed between Freeport and Jiangxi Copper last year.

As one of the world's largest copper miners, the TC/RCs Freeport agrees with Chinese smelters has for years been used as a benchmark for contracts worldwide.

However, Freeport's 2024 sales could fall short of levels needed for a global reference, with its export permit for its flagship Grasberg mine in Indonesia expiring next May.

(Reporting by Julian Luk; editing by Pratima Desai and David Evans)