Codelco entered into three-year, rolling copper supply deals to annually supply 50,000 to 100,000 tonnes each to China Minmetals Corp., France-based copper and optical fiber cable manufacturer Nexans SA and U.S.-based wire and cable manufacturer Southwire Co. from 2019 to 2021, Reuters reported Dec. 20, citing sources close to the matter.
According to previous reports, the Chilean state miner was in discussions regarding the "evergreen" deals with China Minmetals and was considering a cap of 60,000 tonnes per year.
Under the arrangement, the contract will be rolled over annually, meaning the deal would extend for three years from 2020 and so on if both parties agree.
Codelco is also in talks to finalize another three-year deal with metal wholesaler China Ordins, one source told the newswire.
Reuters reported that 100,000 tonnes of copper is valued at least US$600 million at current London Metal Exchange CMCU3 prices, and the long-term contracts will allow the company to ensure cash generation in future years.
A source told the newswire that the change is part of a strategic revamp by Chief Commercial Officer Roberto Ecclefield, who was named to the position in March. This strategy involves selling less to commodity traders due to the associated volume of administrative work and costs.
A Codelco spokesman said the company is shifting its focus to customers with large orders but was unable to comment on specific agreements.
"Deals with Chinese consumers are probably among the largest," one of the sources said, adding that about half of Codelco's global sales are in Asia. Another source said Codelco also signed a one-year agreement to supply a unit of China's Jiangxi Copper Co. Ltd. with copper concentrates.