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Report: Codelco, China Minmetals in talks for 3-year copper supply deal

Chilean state-miner Codelco is said to be in discussions to supply up to 60,000 tonnes of copper per annum to China Minmetals Corp. between 2019 and 2021, Reuters reported Oct. 8, citing industry sources.

The company is targeting to secure "evergreen" three-year deals with the Chinese company, which will commit to buy between 50,000 and 60,000 t/y of copper for the period, according to the sources.

Under the arrangement, the contract will 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. The transaction is part of Codelco's efforts to enter longer-term copper supply contracts, focused on the quantity, the sources added.

"Codelco is looking to establish a base of bigger and long term strategic customers worldwide and Asia is not an exception," according to one of the sources.

A separate Reuters report cited Chilean Mining Minister Baldo Prokurica as saying that the country is planning to enter new copper markets to shield its economy from an ongoing trade war between the U.S. and China.

The trade tensions, along with a 25% tariff on Chinese imports of U.S. copper scrap, have created uncertainty about supplies in the world's leading consumer of copper.

"These tariffs have the potential to create a lot of problems for Chinese consumers. But it's not just the tariffs, some companies just want to be sure they have supplies secured," another copper industry source said.

The world's largest copper miner, which produces nearly a quarter of the global copper output, accounted for about 1.73 million tonnes of global supplies in 2017.

For 2019, Codelco has agreed some deals with premiums at US$98 for European customers, US$88 per tonne for some of the Chinese customers and US$83 per tonne for other Asian clients.

An official at Codelco said the company does not comment on negotiations with customers, while a China Minmetals spokesperson declined to immediately comment, Reuters noted.