Japan Smelters to Secure Nonferrous Ore Interests

Japanese nonferrous smelters are changing the businesses when international nonferrous majors increase the copper ore market share in the oligopoly market and nonferrous smelters rush to secure ore sources under rapid demand growth in China and India. Japanese smelters with minor interests in mines try to increase the interests in mines and to develop new mines.Japanese copper smelters manage to secure copper ore in the sellers market. Pan Pacific Copper failed to agree with world largest copper miner, Escondida of Chile in January for negotiation of copper treatment charge (TC) and refining charge (RC) for 2006-2007 shipment. Pan Pacific Copper offered US$ 95 per tonne of TC and 9.5 US cents per pound of RC but Escondida offered US$ 92 of TC and 9.2 US cents of RC citing Chinese smelters accepted US$ 90 of TC and 9 US cents of RC. They failed to fill the US$ 3 and 0.3 US cents of gap and sought third party’s judge for the settlement. Sumitomo Metal Mining also holds the negotiation with Escondida and waits the settlement. The gap between Japanese smelters and copper miners represents current copper mineral industry.Japanese smelters started to use more offshore copper ore than domestic ore in 1960. Then Japanese smelters depend on offshore ore. They rush to secure own mining source recently. Pan Pacific Copper announced on March 14 the firm acquires interest in Regalito copper mine of Chile. The firm plans to produce from ore to copper ingot with solvent extraction electrowinning process starting copper mine operation only by Japanese owner as early as 2011.Japanese smelters seek other nonferrous metal resources. Mr. Koichi Fukushima, president of Sumitomo Metal Mining said at press conference in January 2004 the firm would become one of the nonferrous majors in 10 years. He described the resource strategy to secure metal resources as majors. The firm launched Coral Bay Nickel project in Philippines and operates Pogo gold mine of Alaska, which is the first offshore smelter for with major share holding. The firm also expends 1 billion yen to exploration of new mines and tries to secure major control in offshore mines.Copper ore supply is still oversupply. However, the demand is growing when smelters rush to expand the output capacity in China and India. Copper ore supply is expected to get tight in and after second half of 2006. Under the supply balance, copper ore purchase negotiation is expected to get harder for 2007-2008 shipment. Japanese smelters try to secure stable ore sources by developing own sources.