LONDON Treatment and
refining charges (TC/RCs) for copper concentrates could spike
in the near term after Vedanta Resources Plcs declaration
of force majeure at its Tuticorin smelter in
Spot TC/RCs for clean copper
concentrates have been quoted at about $55 per dry metric
ton/5.5 cents per pound in recent weeks, down from spot TC/RCs
as high as $80/8 cents earlier in the year as new mine supply
entered the market. But terms may rise again if the Tuticorin
outage lasts more than two to three weeks, a smelter source
Vedanta subsidiary Sterlite
Industries Ltd. declared force majeure to customers
and suppliers April 2 after the Tamil Nadu Pollution Control
Board ordered the 400,000-tonne-per-year smelter to halt
operations March 29 following pollution complaints.
The declaration of force
majeure came despite Sterlites legal clearance to
continue to operate the plant, which was granted April 2.
Indias Supreme Court
overturned a stayed order issued by the Madras high court in
2010 for the plant to be closed, upholding Sterlites
appeal against the decision, the company said.
While it was satisfied with the
appeal, the court ordered Sterlite to pay 1 billion rupees
($18.22 million) to a nationalized bank and ordered that the
interest generated be used for air and water improvements at
the plant, Sterlite said April 2.
In its notice to customers, the
company said the force majeure will remain in place
until "the situation returns to normal," but suppliers to the
company were confident that the plant will reopen following a
meeting with the pollution control board in the coming
Sterlite buys a large portion of
the feed for the smelter on contract, but it also has a
considerable exposure to the spot market for concentrates, one
By the afternoon of April 3,
traders and producers were offering copper concentrates
destined for the Indian smelter to alternative customers,
market sources said.
One trader had a concentrates
cargo in port as the shutdown was announced and is now looking
for a new buyer for the material, the supplier told
AMM sister publication Metal Bulletin.
Miners also have approached
customers to offer them early delivery of material and
additional volumes under long-term supply contracts to place
concentrates due to be delivered to Tuticorin in April, a
smelter source told Metal Bulletin. "Tuticorin is
quite a big smelter and it is fully exposed to concentrates
imports, so this could be quite significant for the custom
concentrates markets if the suspension continues," he said.
Any sustained outage could
loosen the market for copper concentrates over and above
forecasts for oversupply arising from increased mine production
and a series of smelter outages planned this year by Atlantic
Copper SLU, Aurubis AG, Boliden AB and KGHM Polska Miedź
The outage also is having an
effect on copper cathode premiums in the region, as domestic
customers of Sterlite evaluate whether they will need to import
material to cover their requirements.