US miner Freeport-McMoRan Copper & Gold has agreed to pay 16.3 percent more in annual processing charges to large Chinese copper smelters next year, with the 10-year-high fee likely to set the benchmark for the mainland. The increase in charges is a clear signal that even miners accept copper will swing into surplus next year after five years of deficit. Expectations of swelling supply have hung over copper prices, which have fallen about 12 per cent this year. Higher charges usually spur smelters to boost production, which would ease supply constraints if mainland smelters also ramp up exports. China’s top integrated copper producer, Jiangxi Copper, and other large mainland smelters have agreed with Freeport to term treatment and refining charges (TC/RC) of US$107 per tonne for copper concentrate shipments next year, three sources said on Wednesday. That is up from US$92 per tonne for term shipments this year, which was 31 per cent higher than for shipments last year. The 2015 charges, the highest since 2005, are for clean, standard copper concentrates to China. Freeport runs the world’s second-biggest copper mine, in Indonesia. The agreed TC/RC were in line with market expectations but below Asian spot market prices. Miners pay TC/RCs to smelters to convert concentrate into refined metal, with charges deducted from the smelters’ purchase prices. As the supply of concentrate increases, the demand for smelting capacity and the charges also rise, translating into higher profits for smelters. Mine output is estimated to rise more than 8 per cent next year. “Other global miners should follow that TC/RC, which would be the benchmark for China,” one source from a large state-owned smelter said. Freeport and mainland smelters started talks on TC/RCs last month and reached the agreement on Tuesday, according to a second source. Jiangxi Copper had originally sought US$110, while Freeport’s opening offer was US$100, the second source said. Mainland smelters would continue to hold talks with other miners, including BHP, this month, a third source said.