[miningmx.com] — Japanese smelters expect tough negotiations on 2010 copper processing fees as they face increased competition from refineries in China and tight global ore supplies, the country’s refining industry body chief said.
Masanori Okada, the head of the Japan Mining Industry Association, said smelters were looking to keep processing fees for the 2010 calendar year at around the $50 per tonne and 5.0 cents per pound set for mid-year contracts that started in July.
A cut in treatment and refining charges (TC/RCs), the fees paid by miners to copper smelters to refine ore into metal that are a key part of copper refiners’ income, could force Japanese smelters to reduce output.
“We expect price negotiations to be centred around the mid-year level of $50/5 cents,” Okada, also president of Nippon Mining & Metals Co, the mining unit of Nippon Mining Holdings Inc, said at a news conference.
“The situation is tough because so many new smelters are built and running in China, and they don’t mind getting low (processing) fees,” he said.
But one bright spot is that a critical period seems to be over in a series of labour talks in the world’s No.1 copper producer, Chile, although talks at some mines like Escondida, the world’s biggest, have not been settled ahead of a presidential poll next month, Okada said.
Miners often use prolonged wage talks to negotiate TC/RCs to their advantage. Chile provided about 40 percent of the roughly 5 million tonnes of copper concentrate Japan imported last year.
Fears of supply disruptions in Chile helped keep copper prices high as prices have more than doubled this year on hopes that the worst of the global financial crisis has ended.
Copper rose to 14-month highs above $7,000 a tonne this week.
