Freeport’s Indonesian copper concentrates export quota tripled; tight availability easing
Copper miner PT Freeport’s export license for copper concentrates has been tripled by the Indonesian Energy and Mineral Resources Ministry for the March 2019-March 2020 period, Fastmarkets has learned.
PT Freeport has been granted additional export quotas for copper concentrate from Indonesia, bringing annual export volumes to 700,000 wet metric tonnes (wmt) up from an initial quota of 198,282 wmt, local newspaper Jakarta Post reported on Friday September 13.
The ministry’s minerals director, Yunus Saefulhak, said the approval of additional quotas was due to successful optimization schemes at PT Freeport’s Grasberg copper-gold mine in Papua province of Indonesia, according to local media reports.
Market participants told Fastmarkets Freeport has been actively quoting and tendering in the market.
Some of the Grasberg tonnages offered are for nearby delivery in September, while some are for the fourth quarter of this year, sources said.
However, mined concentrate from Grasberg coper mine has a high gold content and is not attractive to most Chinese smelters who do not have the facilities to extract the precious metal. Additionally, many Chinese smelters report being well stocked in raw material feed for cathode production in the third quarter. Therefore, even the material’s prompt delivery and relatively cheaper transport costs owing to Indonesia’s proximity to China have not tempted Chinese buyers.
“The tender [for Grasberg concentrates] has circulated in the spot market for two to three weeks, but no bidders were heard,” one trader source told Fastmarkets.
The company has quoted treatment charges of over $60 per tonne to Chinese smelters, Fastmarkets understands.
Spot copper concentrates TCs gains support
Offers of Grasberg copper concentrate cargoes in recent weeks, returning Peruvian supply and high stockpiles of raw materials in the major consumption hub of China have all pushed up treatment and refining charges (TC/RCs) - the fees paid to smelters to process concentrates into copper cathode.
Fastmarkets MB’s copper concentrates TC index, cif Asia Pacific stood at $50.30 per tonne/ 5.03 cents per lb on Friday, up by 2.2% from $49.2 per tonne/4.92 cents per lb on August 30.
Supply from Peru has also increased since transportation linking Peru’s Matarani port to copper mines owned by Hudbay, MMG, Freeport and Glencore gradually started to recover following a protest that began in July.
“Previously, we thought the TC rebound was the result of resistance to buying by smelters before the start of annual benchmark negotiations during October’s LME Week to win more bargaining chips,” an active copper trader source said. “But after checking the market, we found a sharp increase of spot availability might be a bigger incentive, not only from PT Freeport and Peru, also tendered supply from other copper mines.”
Tenders for copper concentrates from Grasberg, Escondida, Gibraltar, Black Mountain, Carmen, Chapada as well as Southern Peru Copper Corporation have been offered in the spot market in the past three weeks. But traders have become less active in locking in materials and few tenders have been heard to be awarded so far.
“If hundreds of thousands of tonnes of export quota for Indonesian copper concentrates accumulate in the following quarters, tight spot availability will definitely fade and copper TCs will be supported further,” a second analyst said.