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          Jiangxi Copper seeks record treatment fees on higher ore supply

          Categories: Industry NewsStars: 3Stars Visit: - Release time: 2014-11-20 14:44:00
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          Bloomberg reported that Jiangxi Copper Company, China’s largest producer of the metal, seeking to charge record high fees for treating and refining ore next year as growth in mine supply exceeds the country’s smelting capacity expansions.

          Mr Wu Yuneng, a vice president at the Jiangxi based company, said that the charges could rise by at least 20% to USD 110 to USD 120 per tonne to treat concentrate and 11 cents to 12 cents a pound to refine the metal. The rates this year were USD 92 per tonne and 9.2 cents a pound.

          Morgan Stanley said that higher fees would help boost smelters’ earnings and support copper prices. Futures in London slid 10% this year amid slowing economic growth in China, the world’s biggest user. Global mined output will expand by 4.8% to 19.3 million tonnes next year.

          Mr Wu said that “A surplus is only occurring in ore supply, not in refined metal. Bottlenecks in smelting capacity are still there. The capacity of Chinese smelters that treat imported ores will rise 520,000 tonnes to about 4.4 million, while the country’s total capacity, which includes processors that handle domestic supplies, will rise about 700,000 tonnes to 6.3 million.

          According to London-based researcher CRU, the fees are deducted from what smelters pay mining companies for the raw material. They reached as high as USD 105 for treatment and 10.5 cents for refining in 1997. Treatment fees are expressed in dollars per ton of concentrate received and refining fees in cents per pound of copper in the ore.

          Mr Wu said that China’s refined copper demand will rise through next year because of a spending boom to expand the power grid. Orders from State Grid Corporation have been picking up recently. Demand for electrical equipment will rise next year as the grid operator accelerates investment to meet budget targets by the end of the 12th five year plan.

          The country’s annual copper consumption will rise 7% in 2015, following a 7.2% expansion this year to 10.08 million tonnes. China’s output of the refined metal will grow about 9.9% to 6.79 million tonnes this year and will add another 600,000 tonnes to 700,000 tonnes of production next year.