Chilean copper miner offers Chinese smelters negative processing tariffs

Chilean copper mining company Antofagasta is offering Chinese smelters negative processing fees of -$15 per ton amid a global decline in ore supplies. This information was reported by Bloomberg, citing individuals familiar with the negotiations.

The processing fee is also known as TC/RC. According to the news agency, its sharp decline is caused by the rapid expansion of global red metal smelting capacity which is outpacing ore production growth in mines.

Negative TC/RC means that refiners are paying more for the ore they purchase than the value of the copper it contains. A further decline in metal refining prices under long-term contracts would seriously harm copper smelters, according to Bloomberg. Refining fees traditionally account for about a third of their revenues.

For comparison, Chile and China agreed on a TC/RC of $23.25 per ton under a mid-year delivery contract last June.