Japan's Pan Pacific Copper Co Ltd has won a roughly 70 percent increase in copper processing fees for 2009 in talks with BHP Billiton Plc/Ltd (BHP.AX)(BLT.L), an official at parent company Nippon Mining & Metals Co Ltd said.
The official at Japan's top copper smelter declined on Thursday to provide exact figures for this year as talks with other miners are still under way, but he said that 2008 treatment and refining charges (TC/RCs) had been set at $45 a tonne and 4.5 cents a pound, respectively.
He declined to comment on whether a price participation (PP) clause, which helps boost processing charges when copper prices rise, had been resurrected in the contract. Global miners scrapped the clause last year.
Asian copper smelters have been able to win rises in copper processing fees for 2009 due to an increase in copper concentrate supply, which has eased the competition between firms in need of the raw material to produce copper.
Still, economic conditions are grim as global demand plummets for the industrial metal, which is used extensively in the power, construction and other industries.
The first word on levels for 2009 copper processing fees came from Mitsubishi Materials Corp (5711.T), which said last week that it had won a roughly 70 percent hike compared with 2008 in talks with Freeport-McMoran Copper & Gold (FCX.N).
It is widely believed that 2009 processing fees between Mitsubishi Materials and Freeport were set at $75 to treat and 7.5 cents to refine.
This view appears to have been verified by news that Jiangxi Copper Co Ltd (0358.HK)(600362.SS), China's top copper producer, had settled TC/RCs at $75 and 7.5 cents with Freeport.
A Jiangxi Copper executive said the firm had matched the TC/RCs with Japan's, and that the contract did not carry the PP clause.
The first processing fees to be set typically become the benchmark for that period.
The TC/RCs had been either steady or falling since the midyear fees for the 2005/06 period due to tight availability of concentrate supplies at the time.
Smelters usually have two types of annual contracts with miners for processing fees, a key source of income for the smelters. The contracts begin either in January or July.
Top Japanese copper smelters have been forced to curb production of the industrial metal due to poor demand in Japan as well as abroad.
Pan Pacific has said it will cut runs by 10 percent or more for the January-March quarter, due to the decline in demand.
Copper MCU3 on the London Metal Exchange is trading around $3,270 a tonne, having lost more than half its value since marking a record high above $8,900 in early July. (Reporting by Miho Yoshikawa; Editing by Chris Gallagher)© Thomson Reuters 2009 All rights reserved