A very interesting article here that means the miners...

A very interesting article here that means the miners effectively have had a cushion against falling prices delivered to them courtesy of the shortage of concentrate, in BHP's case equating to $US25c-35c/lb which is around 10% of the copper price.

Copper Producers Turn The Screws
FN Arena News - November 13 2006

By Greg Peel

Treatment charges and refining charges (TC/RC) have been a bone of contention for copper producers all year (for a full explanation see "Copper Smelters Scramble For Supplies", 12/09/06). The biggest sticking point has been the price participation scheme, which has weighed in favour of the smelters and against the producers as the copper price has only trended one way of late.

The problem now for the smelters is that given all the disruptions in the copper industry, copper concentrate is in short supply, meaning smelters are competing to acquire concentrate to turn into finished product. This puts the ball in the court of producers, who have countered by reducing TC/RC price payments and overturning price participation.

This time last year producers were being charged a total of US24c/lb, but with price participation smelters were receiving as much as US50c/lb. Copper giant BHP Billiton (BHP) has just settled deals with Korea and India at a charge of US16c/lb and no participation.

Thus UBS calculates the removal of price participation alone will save BHP US20-25c/lb, based on a copper price forecast of US$3.25/lb.

UBS is not going to change its forecasts until the new price regime is ratified by those hard-bargaining customers, Japan and China. But on the assumption that a new benchmark has been set, there will be earnings benefits for copper producers.

UBS sees BHP, Rio Tinto (RIO) and Oxiana (OXR) gaining 1-2%, while less diversified miners will fair better. UBS suggests a 13% increase for Aditya Birla (ADY) and 14% for Newcrest (NCM).