* Sees TC/RCs steady at around current levels over next few
* Says Atlantic Copper will produce 15-16 pct less cathode
* Says copper cathode sales in Europe "flat to slightly
By Maytaal Angel
MADRID, March 7 Global miner Freeport McMoRan
Copper and Gold said it was more than willing to supply
any new copper smelters in Indonesia with raw copper
concentrates but remained reluctant to build smelting operations
The Indonesian government is renegotiating royalty contracts
with foreign investors including Freeport Indonesia as it tries
to push firms to add more value within the country. It is also
pushing for higher royalty payments and divestment of
"We have our contract of work and we are abiding by it. If
there is any new smelting capacity built in Indonesia, we will
make every effort to be able to supply concentrate," Javier
Targhetta, Freeport's senior vice president of marketing and
sales, said in an interview at the Metal Bulletin Copper
Conference in Madrid on Thursday.
"Smelting is a difficult business. You have big capital
expenditure and small or no margins at current treatment and
refining charges (TC/RCs), and I don't see TC/RCs improving in
coming years," he added.
Miners pay TC/RCs to smelters to refine concentrate into
metal. The charges typically rise when concentrate supply
increases, forcing miners to compete with each other for
Output at copper mines started to recover late last year
from years of underperformance, and as welcome relief to long
suffering smelters, benchmark TC/RCs increased 10 percent in
January to $70 a tonne and 7 cents an lb.
Targhetta, however, did not see the charges moving to levels
that would provide fat smelting margins, even though he expected
global concentrate supply to rise further this year and Freeport
itself to produce some 20 percent more.
This is thanks to rising ore grades at Grasberg, the world's
second-biggest copper mine, where negotiations with the
Indonesian government are holding up Freeport's decision to
invest billions to develop underground mining at the site.
Freeport has so far agreed to divest up to 20 percent of the
Indonesian firm but says a long-standing Contract of Work
protects it from government rules instituted last year that
require foreign miners to divest 51 percent of assets.
Targhetta, who is also president of Freeport's Atlantic
Copper smelter in Spain, said it would produce 15 to 16 percent
less refined copper this year because of a planned two-month
maintenance period starting Sept. 1.
Atlantic produced 274,000 tonnes of copper last year. Global
copper production is estimated at around 20 million tonnes.
In the year to date, the Spain-based smelter, which supplies
the Spanish and Mediterranean market, has recorded "flat to
slightly lower" refined copper sales, according to Targhetta.
"We don't see any improvement in the European market," he
Europe is struggling to emerge from a sovereign debt crisis
that has decimated growth. While there were some encouraging
data points earlier this year, a deadlocked election in Italy
has since proved a major setback for the single currency zone.