BHP Billiton in talks with private smelters

Representatives of BHP Billiton, a global mining giant, are in the country to negotiate on the copper treatment and refining charges (TC/RC) with private smelters, including Hindalco and Sterlite.

The domestic copper smelters are reportedly pressing for a higher TC/RC of $60 a tonne, or and 6 cents a pound, while BHP is seeking lower rates.

According to industry sources, the BHP representatives, who visited Japan last week, are in India now and holding preliminary meetings with the domestic smelters. The contracts are expected to be finalised after some rounds of negotiations. The smelters were asking for charges that prevailed during the previous contracts signed last December, they added.

TC/RC is a charge miners pay smelters for treating and refining copper concentrate. As a normal practice, smelters and refiners enter into a contract with miners to buy copper concentrate at a discount to the prices prevailing on the London Metal Exchange (LME), with the TC/RC factored into the discount. So, the higher the TC/RC the higher is the discount. The charges depend on the quantity of the copper concentrate. The charges are a main source of income for smelters, who process the concentrate into finished products such as copper cathodes.

The low TC/RC was mainly because of a short supply of copper concentrate globally and the scenario was likely to continue for rest of the financial year, hinted Hindalco Industries Managing Director D Bhattacharya. Hindalco and Sterlite and other domestic smelters import copper concentrate from mines overseas.

Hindalco, on an average, imports about 13 lakh tonnes of copper concentrate, while Sterlite imports about 12 lakh tonnes.

The other copper concentrate miners, including Highend Valley of Canada and Oktedi of Papua Guinea, are also likely to visit the country for negotiations on TC/RC.

Hindustan Copper, a public sector major, owns smelters and refines the concentrate from its mines in Jharkhand.

The country's primary copper production (mined) in 2006 was about 25,000 tonnes, while refined copper was around 750,000 tonnes. The installed copper smelting and refining capacity is, however, in excess of 1 million tonnes.

Copper consumption in 2006 was about 4.4 lakh tonnes, with a y-o-y growth of 7 per cent.