Freeport to break away from copper benchmark it set for decades
Freeport-McMoRan's Atlantic Copper smelter. Credit: Freeport-McMoRan Freeport McMoRan Inc. plans to break away from the benchmark pricing system underpinning global sales of mined copper ores to protect the profitability of smelters, the company's top commercial executive said in an interview.
The global copper industry has long relied on a single benchmark for sales of semi-processed ores known as concentrates. Copper smelters receive processing fees called treatment and refining charges, or TC/RCs, to turn concentrates into metal. These fees -- which are deducted from the value of the metal contained in concentrates -- are crucial to keep the furnaces running, as they typically account for almost one-third of smelters revenues.
But unprecedented supply disruptions, smelting expansions, as well as strong buying interest from traders, have pushed benchmark TC/RCs to record lows in 2025. "Over the last 35 years, I have never seen anything like this this," said Javier Targhetta, Freeport's senior vice-president for sales and marketing. "We, Freeport, are not happy our customers are losing money."
Many expect the benchmark to plunge even further in 2026, potentially turning negative -- which would effectively mean that the charges are added to the cost of concentrates, rather than deducted from them. In such an outcome, Freeport would likely elect not to follow the benchmark next year, and would instead strike individual supply deals that would better protect smelters' margins, Targhetta said.
"The market is evolving away from the benchmark system, now more than ever," he said in an interview as benchmark negotiations for TC/RCs kicked off during LME Week in London.
The comments stand out because for more than three decades, Targhetta was in charge of signing massive supply deals with smelters that have routinely provided the global TC/RC benchmark. The company stepped back from the process in deals for this year, after building another smelter of its own that left fewer concentrates available to other buyers. Chilean miner Antofagasta Plc took the helm, and set a record-low benchmark[1] with a treatment charge of £21.25 per ton of ore processed, and a refining charge of 2.125 cents per pound of metal produced.
Targhetta is also the chairman of Freeport's Atlantic Copper smelter in Spain, which sources concentrates from Freeport's own mines, as well as third parties. That adds to Targhetta's concerns about the steep decline in processing fees. In one recent tender, traders were offering TC/RCs of less than -£100/-10 to secure supplies next year, according to people familiar with the matter.
"We don't call those numbers benchmark; they are nonsense," Targhetta said, referring to recent spot transactions. "Atlantic Copper would not accept a zero tolling fee."
(By Julian Luk and Mark Burton)
References
- ^ set a record-low benchmark (www.mining.com)