AW1 General Chat, page-3779

Adding this post to General Chat as well as I think it may be useful:

Hey Guys,

I thought that this may be helpful as I see a lot of people trying to get a better understanding of how DSO concentrates are valued.

Source Reference: Mark Hansen (director of Market Capital Group Pty Ltd. He trained as a geologist and has worked as a director of listed companies for over 20 years)

"Concentrates:

Copper concentrates are produced by the beneficiation, or upgrading, of copper ore. A typical copper ore would be 0.7% to 2% copper, a typical copper concentrate would grade around 25% to 35% copper.

Copper concentrates are either smelted and refined in-house, or sold to custom smelters. The concentrate may be smelted to produce blister copper for sale to a custom refinery, or the blister copper may be refined to cathode, which is then sold into the market.

Concentrates sales contracts are specialised and very complex. Concentrates are typically sold on a CIF, CIFFO (Cost, Insurance, Freight Free Out, buyer pays for unloading) or FOB (Free Onboard Vessel) basis.

Concentrate value is first determined by agreeing upon payable copper content. This takes account of smelter losses and will typically be 95% to 97% of the contained copper. The next deduction will be the treatment charge, payable as USD per dry metric tonne of concentrate. There is also a refining charge payable as USD per pound or tonne of copper metal.

There are also penalty charges for deleterious elements. Typical elements which attract a penalty charge are: magnesium, aluminium, chlorine, cobalt, nickel, zinc, arsenic, mercury, selenium, antimony and bismuth. Some elements, such as uranium, could render the concentrate unsaleable. There are also some elements, particularly gold and silver, that are payable.

Finally, there will usually be a price participation factor which will allow the smelter to increase the treatment and refining charges should the copper price increase above a pre-determined level."


My personal added notes:
- My understanding is that our DSO does not contain any deleterious elements, so that is great as no deductions for this. Also our DSO contains Silver so that will is a payable addback.
- For an interesting further read on Copper concentrates treatment and refining charges (TC/RCs) visit https://www.fastmarkets.com/insights/high-copper-concentrate-costs-supply-deficit-to-hurt-copper-smelters-from-2025-lme-asia-week-2024/

I hope this is useful