London 08/04/2016 - The copper concentrates blending market will grow further in 2016 with increased interests from Chinese smelters to participate in the blending business.
Daye Qiansheng (Hong Kong) Investment, a subsidiary of top Chinese copper smelter Daye Non-ferrous Metals, has taken the first steps into copper concentrates blending business in Malaysia, according to a source familiar with the matter.
"We've rented a warehouse and are planning to buy the equipment," the source added.
In starting a blending facility, Daye can make its own copper concentrates blends for importing into China, rather than buying them from traders.
Also, Chinalco’s smelter in Ningde, Fujian province is under construction together with a blending facility - the site is expected to be completed by late 2018 with an annual capacity of 400,000 tonnes per year.
“It would change the market, especially the blending market by a lot. The main [aim] today is to blend down to the allowed level so as to be able to ship to China,” said a trading source in Europe.
Market participants expect future copper concentrates supply from Toromocho, owned by Chinalco Mining Corp International (CMCI), to head directly to the Ningde smelter for blending upon government approval.
“Even if they cannot get the blending licence, they could still use it as a warehouse to store raw materials which will not be a waste of money,” a mining source said.
Last month, Li Baomin, the chairman of Jiangxi Copper had asked the government to allow copper concentrates blending facilities to be built at the ports of “special administrative areas”, according to local media reports.
Chinese smelters usually buy blended copper concentrates from international traders or Codelco, of which material quality varies.
“It makes sense if smelters could get the approval from the government as it’s money-making business. Why should they let a third party do it and then buy from them?” a mining source agreed.
If one smelter gets a blending licence, others would want the same, which could potentially open a flood gate, he said. The government would need to properly control and monitor this, he added.
Previously, only Xiangguang Copper has the license for blending in the port of Qingdao, but it has been suspended by the government since July 2015.
GROWING BLENDING INTEREST WORLDWIDE
Global capacity for blended concentrates were estimated to have exceeded three million tonnes in 2016 compared with 2.5 million tonnes in 2015, according to data from Codelco.
Treatment charges and refining charges (TC/RCs) for Codelco's blends are usually $10 per tonne/1.0 cents per pound higher than the standard clean grades, while other blends fetch $15-20/1.5-2.0 cents higher.
Mining companies and commodity traders blend high-arsenic concentrates with lower-arsenic 'clean' material, to bring the ratio down to an acceptable level and potentially make lucrative margins throughout the process.
Blended copper concentrates are comprised of a mixture of clean and complex grades, whereby the latter has higher impurities such as arsenic - which is required to be less than 0.5-percent when imported into China.
Appetite for super clean copper concentrates remained strong with bids for super clean materials recently at high $60s to low $70s.
“Traders are keen to develop business with miners such as Antofagasta since Los-Pelambres concentrates are super clean and are fit for blending. Nowadays, stable clean concentrate supply has become the key for blending operations,” said a Chinese trading source.
Demand has also increased for arsenic-rich or complex materials due to lower arsenic levels from mines such as Toromocho and Ministro Hales.
Codelco, for example, will increase its blending concentrates sales up to 500,000 tonnes in 2016 from 450,000 tonnes in 2015 before exiting the concentrate blending business post-2017 as the company would solve the complexity problem through technological solutions, said Roberto Ecclefield, vice-president of non-refined copper sales at Codelco.
The market has seen the expansion of blending facilities worldwide. The big players include Ocean Partners in Taiwan; Trafigura in Peru, Mexico and Spain; Louis Dreyfus Commodities in Taiwan, Mexico and Peru; LG International in South Korea; Mitsui in South Korea as well as MRI Trading in Malaysia.
(Edited by Vivian Teo)