concentrate issues-glencore

I thought this was an interesting bit of info. It comes from a recent UBS Broker Report -Jan 2009.

FatMan









Glencore, which had been contracted to take 45% of Lumwana’s concentrate
production for smelting and trading, has refused to accept the initial shipments
of concentrate. The reason provided by Glencore is the supposedly offspecification
concentration of uranium in the copper concentrate; however,
Equinox believes its concentrate is within specification and hinted at possible
other motivations for Glencore in refusing the concentrate for treatment. Some
evidence in support of this is provided by the observation that Glencore did not
independently sample the concentrates from Lumwana.
We speculate that a possible reason for Glencore to refuse the concentrate could
be the disappointing capability of its copper smelter in Zambia: The Mufulira
smelter in the Mopani copper mining & smelting complex. This historical
smelter has undergone a partial modernization in 2007-2008 which evidently did
not result in the capacity expansion that was hoped for by its owners, Glencore
(73%), First Quantum (17%) and the Zambian Government (10%). As a result,
third-party concentrate that had been expected to be treated by Mufulira has
been building up in stockpiles: For example, concentrate stockpiles from First
Quantum’s Kansanshi and Frontier mines have been building up throughout
2008 due to inability of Mufulira to process these feeds, see Chart 3. Hence, it
could well be that Glencore is trying to avoid any more concentrate supplies