UPDATE 1-Aurubis sees higher copper treatment, refining charges

* Aurubis sees higher copper treatment charges

* Sees copper concentrate surplus

* To be net cathode buyer in 2011

(Adds details, comments on copper price)

By Melanie Burton

SANTIAGO, April 6 (Reuters) – Smelters will wrest back some
control from miners in annual treatment charge talks, as record
copper prices encourage ore output that may struggle to find a
home, Europe’s biggest copper producer Aurubis (NAFG.DE: Quote, Profile, Research) said
on Wednesday.

“The growth of the mines is certainly higher than the
growth of the smelters. In the Western world, we don’t have new
smelters because of the high cost of inventory … and for that
reason TC/RCs (treatment and refining charges) are going to
increase. The principle trend is undoubted,” Aurubis chief
executive Bernd Drouven, told Reuters on the sidelines of the
CRU copper industry gathering in Chile.

TC/RCs are the fees paid by mines and traders to smelters
to refine concentrate into metal.

Aurubis produces around 1 million tonnes of copper cathodes
each year and from them a variety of copper products. It has
operations in seven European countries and is headquartered in
Germany.

Drouven said that smelter capacity in China, which is low
compared with other parts of the world, can’t easily be ramped
up due to constraints in technology and equipment supply.

As a result, a surfeit of concentrate may overwhelm smelter
capacity, handing back “leverage” to smelters, he said.

This year’s concentrates negotiations have been defined by
what happened last year. Benchmark 2010 terms came in at $46.50
per tonne for smelting and 4.65 cents per lb for refining.

“People talk about a large deficit of concentrate which I
don’t believe. We even see a surplus due to what happened in
Japan,” Drouven said. “And we expect the concentrate markets to
remain in surplus.”

$8,000 FLOOR?

Loftier copper prices (CMCU3: Quote, Profile, Research) above $8,000 per tonne may
well be sustained reflecting increased costs shouldered by
producers while the chance of a “substantial” pull back is
small, Drouven said.

“That would require a substantial surplus of copper at
warehouses, and for markets to come to the view that there is
an abundance of material available. That would require
substantial smelter capacity and that I don’t see coming up in
the near future,” he said.

Drouven sees the global market for refined copper staying
finely balanced for the next five years.

“We see currently much better TC/RCs. We see high sulphuric
acid prices,” he said.

A recovery in demand from its key European market has
helped Aurubis run down stocks that grew in the wake of the
financial crisis. As a result, Aurubis expects to be a “net
buyer” of cathodes again in 2011.
(Reporting by Melanie Burton; editing by Simon Gardner and
Lisa Shumaker)

UPDATE 1-Aurubis sees higher copper treatment, refining charges