Jiangxi Copper Sees Treatment Fees Advancing as Ore Supply Rises

Jiangxi Copper Co. (358), China’s largest smelter of the metal, said it will seek a 43 percent increase in fees for treating and refining ore next year as global mine supply increases.

The charges may rise to $100 a metric ton to treat concentrate and 10 cents a pound to refine metal, Wu Yuneng, a vice president at the Jiangxi-based company, told reporters on Sept. 7. The rates for this year were $70 a ton and 7 cents a pound, he said.

Higher treatment fees would help boost earnings at smelters and add support to copper prices that may come under pressure from a global glut in the metal. Futures in London tumbled into a bear market in April and fell 9 percent this year as economic growth slowed in China, the world’s biggest user.

“Fees will advance further next year as the pace of growth of concentrate is likely to exceed that of new treatment facilities,” Wu said during a conference in Shanghai.

The charges are deducted from the price paid by smelters to mining companies for the raw material. Jiangxi Copper on Sept. 6 settled a short-term deal at $99 a metric ton to treat concentrates of the highest grade, Wu said.

Copper for delivery in three months rose 0.8 percent to $7,216.50 a ton on the London Metal Exchange as of 5:37 p.m. in Shanghai.

Concentrate output will expand 2.6 percent to 17.1 million tons this year, Morgan Stanley said in July in a report. That will exceed demand by 53,300 tons, the bank said.

New Output

New output from mines in Oyu Tolgoi in Mongolia, Las Bambas in Peru, and Esperanza in Chile is estimated to add 3.53 million tons in global supply from 2012 through 2015, Zhang Mei, a researcher with China’s Ministry of Land and Resources, told the conference in Shanghai.

China’s output of refined copper for this year may be unchanged from 5.6 million tons last year because of a tight supply of scrap metal, Wu said. The shortage may reduce production of refined metal by about 350,000 tons, Wu estimated.

Jiangxi may produce 1.2 million tons of refined copper this year and keep the level for next year, Wu said.

To contact Bloomberg News staff for this story: Alfred Cang in Shanghai at acang@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

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