Japanese copper smelters have extended talks for a further month with mining companies such as BHP Billiton Ltd. after failing to reach an agreement on treatment and refining charges for next year.
Pan Pacific Copper Co., Japan’s biggest smelter, will meet miners in January after failing to reach a deal this month, Masanori Okada, chief executive officer of JX Nippon Mining & Metals Corp., said yesterday in an interview. The company, a unit of JX Holdings Inc., owns 66 percent of Pan Pacific. Mitsubishi Materials Corp., Japan’s third-largest smelter, is also still in talks, spokesman Hisato Matsubara said today.
Copper, used in wires and pipes, reached a record $9,276.50 a ton on Dec. 14 and has gained 24 percent this year as a China- led recovery boosted demand. Pan Pacific met with Freeport- McMoRan Copper & Gold Inc. and BHP Billiton, the world’s largest mining company, last week in Tokyo to negotiate fees to turn semi-processed ore, known as concentrate, into copper.
“Current market sentiment is different from the middle of this year” as spot fees have jumped to $80 to $90 a metric ton and 8 to 9 cents per pound from below $10 and 1 cent, Okada said. “We’ve kept output cuts this year on slowing local demand.”
Treatment fees are expressed in dollars per ton of concentrate received and refining fees in cents per pound of copper in the ore. The fees, which dropped 38 percent in 2010 as smelters competed for tight supplies, are deducted from the price paid by smelters to mining companies for the raw material.
Freeport’s Senior Vice President Marketing & Sales Javier Targhetta and Melbourne-based BHP Billiton spokeswoman Fiona Martin declined to comment.
Wide Gap
JX Nippon Mining wants to charge smelting fees near $80 a ton and refining charges at 8 cents a pound in 2011, while mining companies asked to “keep this year’s level of $46.5 a ton and 4.65 cents a pound,” Okada said. Current “favorable” fees for smelters could last into early February, he said.
The fees are typically negotiated twice a year, with most of the volume handled through the year-end accords. In July, fees were set at $39 and 3.9 cents for contracts that began July 1. The declines in fees have reduced revenue for smelters.
Fees for 2011 contracts may climb to at least $60 a ton and 6 cents a pound, Macquarie Group Ltd. said in November.
Copper for three-month delivery gained 1.7 percent to $9,141.75 a ton on the London Metal Exchange at 1:58 p.m. in Tokyo.
Record prices have encouraged Chinese end-users to treat scrap metal and have lured traders to release metal from stockpiles imported last year, Okada said.
The country’s tightening monetary policies and property regulations have cut demand, he said. This was reflected in copper prices on the Shanghai Futures Exchange about $550 to $600 a ton less than those on the LME last week, he said.
Aurubis AG, Europe’s biggest copper smelter, said Dec. 14 that it expected fees to improve next year as the supply of concentrates increases.
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