A mine employee shows a piece of copper ore at the Kilembe mines
A mine employee shows a piece of copper ore at the Kilembe mines, in the foothills of the Rwenzori Mountains, 497km (309 miles) west of Uganda's capital Kampala, January 31, 2013. The Kilembe copper-cobalt mine operated from 1956 to 1972, when it closed due to a drop in world copper prices and now lay in ruins. Uganda's President Yoweri Museveni has promised to rehabilitate the Kilembe mines. Reuters/James Akena

Copper miners will have to spend at least 5 percent more in 2016 as the business of turning copper concentrate into metal at smelters will turn costly. This follows the rising demand for quality ore and an expected spurt in supply.

According to top officials of Aurubis - Europe’s largest copper refiner, the global benchmark treatment and refining charges will jump at least 5 percent in 2016, from the current US$107 (AU$150) a tonne.

“For 2016 we see more abundant concentrate availability, more clean concentrate,” said Stefan Boel, executive board member at Aurubis explaining the rationale of hike.

Shanghai event

The issue of treatment and refining charges, known as TC/RCs is being discussed ahead of the Asia Copper Conference in Shanghai from Nov.17. The event is being organised by the Center for Copper and Mining Studies or CESCO. China is the biggest global producer of refined copper.

“The ramp up of smelting capacity in China has been slower than expected,” noted Christophe Koenig, Senior Vice President Supply Chain at Aurubis.

Generally, TC/RC negotiations between miners and smelters start in October and contracts are clinched during the CESCO week in November, Reuters reported.

“We see arsenic levels increasing over the longer term,” Boel said pointing to the upcoming demand for refining.

The quality of concentrate depends on the level of arsenic content and if the concentrate is high on arsenic, it needs to be blended with cleaner material to make it usable for smelters. Aurubis expects substantial spurt in copper mining capacity in 2016 that will boost concentrate supplies as analysts have estimated almost 1 million tonnes a year of additional capacity from new mine projects coming up in 2016.

However, miners and traders sought to play down the demand for a hike in smelter charges. They say the reality is that smelters will be competing for processing business and a cap on the rise in treatment charges cannot be ruled out. They predict a shortage for concentrate due to the adverse weather conditions and disruptions in many producing countries such as Chile and Zambia.

Glencore smelter

Meanwhile, Glencore inked an agreement with the Queensland government to keep its Mount Isa Mines Copper Smelter open until the end of 2022. The decision follows the planned closure of the Townsville Copper Refinery by 2017.

According to Glencore, the new agreement will secure 800 direct jobs across Australia's North Queensland supply chain. Glencore’s north Queensland Copper Assets CEO Mike Westerman said the company is committed to continue copper smelting operations in Mount Isa and keep it viable, reports Australian mining .

Queensland Resources Council CEO Michael Roche welcomed the agreement and said it signalled a broader contribution of Glencore to the jobs in the region.

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