Smelters fear BHP copper dominance with Rio in fold

Nov 28, 2007 | 03:22 PM | Sean Barry

Copper smelters have raised concerns over BHP Billiton's potential dominance of the concentrates market if it acquires Rio Tinto.

If BHP's $150-billion blockbuster offer for Rio Tinto is successful, the combined company would leapfrog current leader Corporacion Nacional del Cobre de Chile (Codelco) to become the largest producer of custom concentrates in the world, with output exceeding 2 million tonnes annually. Codelco produced about 1.68 million tonnes last year.

The acquisition would give BHP greater control over the world market and make it even more dominant in negotiations with smelters over treatment and refining charges (TC/RCs), a source at one Indian-based smelter said.

"BHP is already the toughest negotiator and generally sets the benchmark against which other producers and smelters agree terms," the source said. "If this deal goes through, BHP is going to dominate concentrate supply globally even more that it does already and this concerns many smelters. There has been a lot of consolidation in the industry and the reduction in supply options is worrying."....