Codelco negotiates a three-year deal to sell copper to China's MinMetals. The proposed partnership marks a change in the sales strategy of Chile's state-owned mining company.
China MinMetals Corporation is the biggest metal ore mining company born out of a strategic partnership of the China MinMetals and the MCC group. The company is globally well-known as the biggest and best metallurgical engineering service provider.
Rumors are circulating that Codelco proposes to sell 50,000 to 60,000 tonnes a year of copper to the Chinese company starting from 2019 to 2021. The deal with MinMetals is part of the Chilean company's effort to secure long-term supply contracts while focusing on the quantity of copper to be supplied.
According to the report of Reuters, Codelco is currently looking to establish a base of bigger and long-term strategic customers worldwide and Asia is not an exception to the company's plans. Additionally, reports also claim that Codelco is considering Asia as one of its most important markets.
The agreement is still in the dark as officials of the two companies have not yet given their comments on the negotiations. According to a Reuters source, the relationship between MinMetals and Codelco has been established for many years and the important things are the three years and the quality.
Codelco is known to be the world's biggest copper mining company. The company produced 1.734 million tonnes of global supplies in 2017 and it is 7 percent of the total global copper produce estimated to be around 23 million tonnes. The company has been regarded as the benchmark for copper premiums.
Copper companies are struggling to make long-term deals because of projected shortages over the coming years caused by improvements in productions and its high demand in the market. Sources claim that companies looking forward to purchasing copper recently may easily find sellers and short-term deficits might increase the market price of the product. They added that it should be expected that scrap heading for the market will close the gap on deficits.
Since August 23, a 25 percent tariff on Chinese imports of U.S. copper scrap was imposed which started uncertainty about supplies in China. The country was the largest consumer of metal used in its power lines and in its industries.
According to a copper industry source, the tariffs have the potential to create lots of problems for the product demand in China. The source also added that some companies who are securing their supplies also create problems to the copper industry.
