Concentrate Sales Contracts

"Mr. Chairman and fellow CMP members, most of these remarks will be made with particular reference to copper concentrate but the basics apply generally to other metal concentrates as well.For very good reasons, using copper as an example, smelting capacity usually is located either close to mine production or close to areas of high copper consumption. The mine producer can add on smelting capacity to insure that the copper in his concentrate can be processed into a marketable form under more or less controlled conditions including costs. On the other hand, the consumer wishing to assure a better supply of copper likewise can build smelting capacity and offer treatment charges attractive enough to discourage mines from investing in their own facilities. In this regard, freight is an important factor. Bulk shipments from the heart of Africa with a large overland component are uneconomic whereas concentrate movements from Australia or South America compare favourably with smaller metal shipments.A mine project which incorporates smelting capacity, will often, through the presence of this capacity, encourage active exploration and development of additional concentrate production in the vicinity. The usual result is that new mines within reasonable distance of the smelter will be able to avoid the capital required to build their own smelting and refining facilities and that the existing facilities will expand to appreciate economies of scale."