Chile’s Antofagasta (LSE:ANTO) was paid more than US$300 ($431.91) a tonne to have its copper concentrate turned into metal in recent tenders, two sources familiar with the matter said, underscoring acute supply shortages as contract talks for 2027 begin.
One of the sources said the numbers represent a record result for Antofagasta, while the second person and a third market source said Canada’s Teck Resources (TSX:TECK.B) sold material from its Highland Valley mine for treatment charges in the minus US$370s a few weeks ago.
Shortages have been building due to a series of disruptions starting with First Quantum’s (TSX:FM) Cobre Panama mine, which was shut in late 2023, and most recently a landslide at Codelco’s El Teniente mine in Chile that left two workers dead.
Miners historically paid treatment and refining charges (TC/RCs) to process their concentrate into refined copper, offset against the cost of the copper contained in the ore.
But at the start of last year treatment charges turned negative, which essentially means smelters reliant on feedstock from miners — mostly in China — are paying to keep their operations running.
In one recent tender, Antofagasta secured a negative treatment charge of US$310 a tonne for 10,000 tonnes of concentrate — partially processed copper ore — from its Centinela mine for November shipment, the sources said, declining to be identified.
In another auction, it sold 40,000 tonnes from Los Pelambres spread over next year in the minus US$330s.
Antofagasta declined to comment. Teck did not respond to requests for comment.
Mating season underway
The low numbers come as Antofagasta prepares to begin talks with smelters for copper concentrate supply next year on the sidelines of the London Metal Exchange Week gathering in London.
The first TC/RC settlement between a major miner — which in recent years has been Antofagasta — and a smelter from China, the world’s biggest copper consumer, traditionally serves as a benchmark for annual supply contracts.
Concentrate shortages are in part due to a massive build-out of smelting capacity in China, which now produces over half of global supplies of refined copper, crucial for electric vehicles, power grids, construction and military equipment.
China’s copper smelting capacity, estimated at 13 million to 14 million tonnes this year, has increased more than 70% over the last decade.
Chinese smelters continue to buy at negative TC/RCs on the spot market, managing to break even thanks to copper prices near record highs, and their sales of byproducts sulphuric acid — prices of which have shot up due to the conflict in the Middle East — and gold.
(Reporting by Pratima Desai and Tom Daly; Editing by Jan Harvey)
Main Image: Antofagasta Minerals
