Codelco in talks to sell copper to China’s Minmetals in 3 year deals
Reuters report Codelco is in talks to sell up to 60,000 tonnes of copper a year to China Minmetals from 2019 to 2021, marking a change in sales strategy at Chile’s state-owned miner which typically made deals on an annual basis, industry sources said. The aim was to agree “evergreen” three-year deals in which the Chinese company would commit to buy 50,000 to 60,000 tonnes a year of copper for the period. Under the arrangement, the three-year pact would be rolled over annually, so from 2020 the deal would be extended to run for three years until the end of 2022 and so on.
Sources said that the deal with China Minmetals, part of Codelco’s efforts to secure longer term supply contracts, focuses on the quantity of copper to be supplied.
Typically supply contracts are agreed annually for the next year during what is known as “mating season” in October and November when producers and customers agree quantities. Premiums are set above the London Metal Exchange benchmark price.
One of the sources told Reuters that “Codelco is looking to establish a base of bigger and long term strategic customers worldwide and Asia is not an exception.”
A Codelco official said that the company did not comment on negotiations with customers. A China Minmetals spokesman said the company could not immediately comment.
A copper industry source said that “The relationship between Minmetals and Codelco has been there for many years, the important thing is the three years and the quantity.”
Codelco, the world’s largest copper miner, accounted for 1.734 million tonnes of global supplies last year, about 7 percent of the total estimated at about 23 million tonnes. It has historically been used as a benchmark for copper premiums.
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