LONDON (July 26): Glencore has started a new copper concentrates blending facility in Taiwan to mix clean material with ores containing high levels of arsenic, three sources familiar with the matter said.
The blending of concentrates containing high levels of impurities such as hazardous arsenic is aimed at making the material fit for shipment to China, the world's biggest importer of copper concentrates.
China's legal import limit is arsenic under 0.5% in copper concentrates.
The move by Glencore follows an increase in the amount of dirty concentrates available on the market, the sources said.
A Glencore spokesman declined to comment.
Dirty concentrates containing high amounts of arsenic and other impurities were coming from mines in Chile and Peru, one of the sources said.
The new blending facility is surprising, as Taiwan and Malaysia are creating new regulations to protect their environment, a second source said.
Complex concentrates, partially treated ore that contains 0.5% or more arsenic, cannot be processed by most smelters in the world for safety reasons and need to be blended first before they can be processed into refined metal.
Glencore has opened the new plant as treatment and refining charges (TC/RCs) are at multi-year lows due to the tight availability of concentrates and an expansion of Chinese copper smelters competing for material.
"If you get higher levels of impurity it will tighten demand for better grades of concentrates. That would be a (downward) pressure on TC/RCs," said Nick Snowdon, an analyst at Deutsche Bank in London.
"If the pool of standard grade concentrate is shrinking that would be a pressure on TC/RCs. It reduces the pool of standard grade concentrate that smelters can access."
Sellers pay TC/RCs to smelters to convert concentrate into refined metal and typically favour the clean, standard grade material.
The latest spot processing rates assessed by Asian Metal slumped this week to as low as US$54 a tonne and 5.4 cents per pound, the lowest since November 2012, amid rising competition for concentrates.
China's copper smelters slashed the third-quarter TC/RC floor by 24.7% to US$55 per tonne and 5.5 cents per pound.
Earlier in July, China's top copper producers Jiangxi Copper and Tongling Nonferrous Metals Group, in a surprise move, secured first-half 2020 copper concentrates with Chilean miner Antofagasta.
First-half 2020 supply deals were done within the US$64 to US$70 per tonne and 6.4 cents to 7 cents per lb levels. This was way below the 2019 TC/RC benchmark that was agreed between Jiangxi Copper and Antofagasta at US$80.80 per tonne and 8.08 cents per lb.
For the first half of 2019, China's copper concentrate imports rose 10.5% from a year earlier to 10.55 million tonnes, reflecting growing smelter capacity in China.