RPT-LME WEEK-Antofagasta kicks off copper talks in Asia, flat fees on table in China, sources say

By Hongmei Li, Lewis Jackson

HONG KONG, May 20 (Reuters) - Flat fees for turning copper concentrate into metal have emerged as a potential starting point for mid-year talks between Antofagasta ANTO.L and Chinese smelters due to tight supplies of mined material, two sources familiar with the matter said.

Historically, miners have paid smelters to convert copper concentrate into metal. But massive shortages have upended the status quo over the past year due to disruptions, starting with the closure of First Quantum's FM.TO Cobre mine in Panama late 2023.

Fees paid by miners to smelters for processing concentrate into copper metal are known as treatment and refining charges (TC/RCs), which have been negative on the spot market since December 20.

Concentrate shortages have also been created by a huge expansion of copper smelting capacity in China, estimated by Benchmark Mineral Intelligence (BMI) at 12.78 million metric tons this year, up 8% from last year and 25% since 2021.

Representatives of copper miner Antofagasta ANTO.L, which uses both annual and half-a-year pricing mechanisms, are in Japan this week meeting smelters and will go to China next week to do the same, one of the sources said.

Flat treatment and refining charges, if agreed for 12-month terms beginning either in July 2025 or January 2026, would compare to an annual 2025 deal of $21.25 per metric ton that Chile's Antofagasta agreed in December with the Chinese smelters and an $80 benchmark for 2024.

Charges agreed between Antofagasta, which declined to comment, and smelters are regarded as a benchmark for the industry.

"I have heard that $0/t is what Chinese smelters may want, as the miner (Antofagasta) may even ask for a negative TC/RC," a market source said.

"Miners and smelters have been in a relationship of competition for a long time ... Chinese smelters have been in fierce competition among themselves with capacity expansions," the source added.

Fastmarkets copper concentrates TC/RC index CIF Asia Pacific plunged to a record low of -$59.10 per ton and -5.91 cents per pound on May 16, while its calculation of implied smelter purchasing levels was at -$43.64 per ton.

A second industry source said: "No number has been mentioned officially, but $0/t is likely."