US copper miner agrees to pay Chinese smelters more for processing

US miner Freeport-McMoRan Copper & Gold has agreed to pay 16.3 per cent 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 of US$107 per tonne for copper concentrate shipments next year, three sources said yesterday. 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 operates the world's second-biggest copper mine, in Indonesia.