Freeport targets 2026 copper concentrates terms above $21.25 benchmark with floor-cap system: LME Week

Key takeaways:

Freeport copper concentrate contracts 2026 introduce a floor-cap system with higher treatment and refining charges than last year's benchmark

Negotiations for Freeport copper concentrate agreements 2026 aim to balance limited supply with smelter viability across global markets

The company's approach to 2026 copper contracts signals a shift away from traditional benchmark pricing models

The world's largest publicly listed copper [1] producer is in negotiations for around 1.7-1.9 million tonnes of concentrate sales in 2026. Both floor and cap treatment and refining charges exceed last year's benchmark of £21.25 per tonne and 2.125 cents per pound. Some deals have already been secured.

Further talks are expected at Asia Copper Week in November, senior vice-president for sales and marketing Javier Targhetta said in an exclusive interview with Fastmarkets during London Metal Exchange Week [2]. The floor-and-cap system, which Freeport [3] began implementing last year, sets both a minimum and maximum level for treatment and refining charges (TC/RCs) throughout the year. This system protects smelters from the benchmark system, which has pushed fees to what Targhetta called "absurd" levels.

"We are trying to compromise between a scarcity of concentrate compared with smelting capacity and the viability of smelters," Targhetta told Fastmarkets on Wednesday October 15. "We know the viability of smelters very well - we operate four smelters."

Numbers for new contracts not yet exchanged

Freeport is targeting contracts with between seven and 10 smelting customers globally for 2026. The deals cover concentrate from the company's operations in Indonesia, the US, and Peru. Some customers have already been locked in for 2026.

These agreements were reached last year and covered both 2025 and 2026, Targhetta said. But the company has not yet exchanged numbers for new contracts. "It could be this happens during Asia Copper Week [4] in November.

Or, [negotiations] could stretch out to Christmas, beyond Christmas, sometimes beyond New Year," he said. "That's been the most usual way most of the times we've settled." "In theory, [we] think that will be producing 1.9 million [tonnes, so] we may settle for 1.7 [million tonnes]. We may leave some portion on the spot market just in case, but it's not something that we strategically do," Targhetta said. "Just a matter of running the business."

Terms significantly above benchmark

Both the floor and the cap in Freeport's 2026 contracts are higher than the 2025 benchmark treatment charge of £21.25 per tonne of concentrate.

The refining charge is also higher, at 2.125 cents per pound of copper, Targhetta confirmed. The floor alone is "well above" and "significantly above" last year's settlement, he said, declining to provide specific figures. Terms vary between customers by approximately £2-4 per tonne of concentrate or 0.2-0.4 cents per pound of copper.

This represents what Targhetta described as a "rather narrow range." All contracts are fixed for the entire year of 2026. The company has not yet discussed terms for 2027.

Fastmarkets assessed the weekly copper concentrate TC index, cif Asia Pacific [5] - the mid-point between smelter and trader buying levels - at £(66.60) per tonne on October 10. This was down by £1.20 per tonne from £(65.40) per tonne on October 3. It marked the eighth consecutive week of decline.

How do they arrive at the floor-cap?

Freeport's approach to setting floor and cap levels centers on balancing two competing factors. "We try to compromise between a scarcity of concentrate compared with smelting capacity and the viability of smelters," Targhetta said.

"That's what we do, we try to compromise," he added. "We try our best to compromise acknowledgement between a scarce market in terms of concentrate. Also, the possible viability of the smelters in the best way we can. Those're our criteria to get to the numbers."

The company's deep understanding of smelting economics comes from operating four copper smelters itself. This includes Atlantic Copper in Huelva, southern Spain, which Freeport has run for 55 years, according to Targhetta. "We know the viability of smelters very well - we operate four smelters," Targhetta said. "We're very familiar with smelting costs elsewhere, not only in Spain."

Targhetta, an engineer by training, said he has personally visited between 20 and 25 smelters around the world. "If you add the smelters that have been visited by our operators, the number would go up to 40 [or] 50," he added. Freeport has trained personnel from numerous smelters at its Atlantic Copper facility. This includes staff from China, South Korea, Japan, Germany, Chile, and Mexico.

This gives the company insight into cost structures across different regions and operating conditions. The company aims to diversify its customer base geographically, with contracts spanning China and other countries, Targhetta said. Freeport has historically supplied concentrate to smelters including the Philippine Associated Smelting and Refining Corporation (Pasar) in the Philippines.

However, that facility was placed on care and maintenance in February 2025 and subsequently sold [6] by Glencore to the Villar family in July 2025. "We haven't sold to them because they've stopped," Targhetta said. He added that Pasar "was a good smelter" and that Freeport had exchanged visits and operational information with the facility.

Smelting companies appreciative of "sensible approach"

Targhetta, who is also chairman of Freeport's Atlantic Copper smelter in Huelva, Spain, said he has received positive feedback from smelting companies about the floor-cap approach.

"I heard already last year... a number of smelting companies being appreciative. They said that they appreciated - even if terms weren't good [or] attractive - they would appreciate our sort of sensible approach to their case," he said. The executive, who has been in the copper business for 35 years, said current market conditions are unprecedented.

"I've been in the business for 35 years and we never enjoyed bonanzas... [it was a] wonderful business, but it was a reasonable business with ups and downs," he said. "Over the last 35 years, I have never seen anything like this."

Benchmark no longer a "healthy reference"

Targhetta, who has been involved in Freeport's concentrate sales since 2005, previously played a key role in setting industry benchmarks. However, he said he no longer considers the current system a valid reference point. "I don't consider it a benchmark at all.

I don't consider it as a healthy reference," he said of the 2025 settlement. "It was terrible, terrible terms." The 2025 benchmark of £21.25/2.125 was set by Chilean miner Antofagasta [7] after Freeport stepped back from the process. "Usually, we were the first to reach agreement with smelters.

Whenever they asked me if we were selling benchmark, I'd say this is not our purpose," Targhetta said. "Whatever price we thought was right, we tried to settle. We didn't care if others followed or not, [we would go where] we feel it's the right price at which we should sell or buy. Whether or not it becomes a benchmark was not our purpose.

It was never us who called it a benchmark." On the current terms: "We don't call those numbers benchmark - they are nonsense," Targhetta said. "Atlantic Copper would not accept a zero-tolling fee." Targhetta said the smelting business has always been "some sort of tolling, not in legal terms in general, though there are exceptions."

"TC/RCs [have] always [been] defined as a portion of the copper price," he said. "Either, mines were paying smelters to turn concentrate into cathode.

Alternatively, there was an agreement between miners and smelters for the smelters to cover their costs plus some profit to turn concentrate to cathode."

"I don't think anyone [would] go into a shop to buy a pound of coffee [where] the shop will pay you for the coffee and let you leave with the coffee and the money," he said.

To learn more about what's happening at LME Week 2025, visit our dedicated content hub where we're regularly updating articles and insights from our metals market experts [8].

References

^ copper (www.fastmarkets.com)
^ London Metal Exchange Week (www.lme.com)
^ Freeport (www.fcx.com)
^ Asia Copper Week (asiacopperweek.com)
^ copper concentrate TC index, cif Asia Pacific (www.fastmarkets.com)
^ placed on care and maintenance in February 2025 and subsequently sold (www.fastmarkets.com)
^ was set by Chilean miner Antofagasta (www.fastmarkets.com)
^ To learn more about what's happening at LME Week 2025, visit our dedicated content hub where we're regularly updating articles and insights from our metals market experts (www.fastmarkets.com)