Mr. Kemori of SMM Says Conditions of Ore Price Negotiation Changing

Nobumasa Kemori, president of Sumitomo Metal Mining (SMM), described how SMM deals with such management problems as severe ore purchasing negotiations, lowering ore grades and mineral resource development at overseas at an interview with Japan Metal Bulletin. Mr. Kemori said the conditions of copper ore price negotiations show signs to change when Chinese smelting capacity expansion is slowing down. He also said that SMM should increase the number of interests in offshore copper mines even with minor shares in order to procure more than two thirds of copper ore for Toyo plant, Ehime, Japan where SMM plans to expand the electrolytic copper output to 450,000 tonnes per year.

Mr. Kemori said copper ore price negotiations would maintain severe for Japanese smelters as long as ore productions are impacted by lowering ore grades, labor disputes and productive facility shortages. However, he presented an expectation one positive factor is slowdown of Chinese smelting capacity expansion. He explained Chinese smelters are suffered from negative net worth since they purchase ores at London Metal Exchange based expensive price level and sell ingot at cheaper prices in Shanghai Futures Exchange. This means ore supply is being easier than before, he said.

As to lowering ore grades, Mr. Kemori explained SMM already improved pre-smelting processes such as ore carrying and drying machines at SMM’s plant while the firm examines to expand ore storing capacity or to blend different grade ores. He also presented another encounter example that SMM would bring all ores produced at Cerro Verde mine in Peru or ore swap between Cerro Verde and other mines.

He referred to a hydrometallurgical method, which SMM is implementing test production at a demonstration plant now. He said the commercial production is immediately possible for regulated ore types but more verification is necessary to adopt the method for ores with low grade or impurities.

Mr. Kemori said SMM sets precedence on ore procurement to realize 450,000-tonne-per-year electrolytic copper output at Toyo plant. SMM would increase the number of interests in overseas copper mines even with minor shares. On the other hand, he explained, SMM will develop its own copper mines to become a nonferrous metal major and the firm already started exploration mainly in South America.