Monday, October 2, 2023

Chile’s Codelco is restructuring copper contracts with Chinese customers

Codelco, the world’s largest copper producer, is changing its long-term sales contracts for copper concentrate to customers in China. The restructuring is planned for 2025 and comes in the context of a change in the Chilean state-owned mining company’s sales strategy.

Codelco plans to diversify its product offering

According to five sources with direct knowledge, from 2025 Codelco plans to stop selling only copper concentrate to its Chinese customers and expand its offering to value-added intermediate products such as the blister and anode, which are obtained from the concentrate and which can be converted into metal, copper or cathode can be converted.

Contract negotiations amid protests

There have been protests from some Chinese customers, but they will have to accept new contract terms involving intermediaries as they will need Codelco concentrates during expected periods of deficit, sources said.

Changes in strategies due to production uncertainties

Uncertainty over whether Codelco can meet its contractual obligations is another reason the mining company is seeking to restructure its sales. “Some actions taken are due to the normal management of Codelco’s commercial product portfolio and not due to availability and/or minor production adjustments,” Codelco said in response to a request for comment. Additionally, the copper producer said it continually updates its contracts according to prevailing market dynamics.

Codelco expects to produce between 1.31 and 1.35 million tons of copper, a key material for the energy and construction industries. The sources, all with long-term contracts with Codelco, have been receiving termination notices from Codelco since July-August and the company wants to sign new contracts with different terms.

Nation World News Desk
Nation World News Desk
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