HONG KONG, May 20 (Reuters) - Flat fees for turning

copper concentrate into metal have emerged as a potential

starting point for mid-year talks between Antofagasta ( ANFGF )

and Chinese smelters due to tight supplies of mined material,

two sources familiar with the matter said.

Historically, miners have paid smelters to convert copper

concentrate into metal. But massive shortages have upended the

status quo over the past year due to disruptions, starting with

the closure of First Quantum's Cobre mine in Panama late

2023.

Fees paid by miners to smelters for processing concentrate

into copper metal are known as treatment and refining charges

(TC/RCs), which have been negative on the spot market since

December 20.

Concentrate shortages have also been created by a huge

expansion of copper smelting capacity in China, estimated by

Benchmark Mineral Intelligence (BMI) at 12.78 million metric

tons this year, up 8% from last year and 25% since 2021.

Representatives of copper miner Antofagasta ( ANFGF ), which

uses both annual and half-a-year pricing mechanisms, are in

Japan this week meeting smelters and will go to China next week

to do the same, one of the sources said.

Flat treatment and refining charges, if agreed for 12-month

terms beginning either in July 2025 or January 2026, would

compare to an annual 2025 deal of $21.25 per metric ton that

Chile's Antofagasta ( ANFGF ) agreed in December with the Chinese smelters

and an $80 benchmark for 2024.

Charges agreed between Antofagasta ( ANFGF ), which declined to

comment, and smelters are regarded as a benchmark for the

industry.

"I have heard that $0/t is what Chinese smelters may want,

as the miner (Antofagasta ( ANFGF )) may even ask for a negative TC/RC," a

market source said.

"Miners and smelters have been in a relationship of

competition for a long time ... Chinese smelters have been in

fierce competition among themselves with capacity expansions,"

the source added.

Fastmarkets copper concentrates TC/RC index CIF Asia Pacific

plunged to a record low of -$59.10 per ton and -5.91 cents per

pound on May 16, while its calculation of implied smelter

purchasing levels was at -$43.64 per ton.

A second industry source said: "No number has been mentioned

officially, but $0/t is likely."