As the supply of mined copper ore tightens, and refining capacity grows, Chilean miner Antofagasta Plc and Chinese smelter Jinchuan Group have inked new copper concentrate supply contracts for 2024 which will lower the processing charges by 9% compared to this year.

People familiar with the matter, who asked not to be named because the details of the deal are not public, said the treatment and refining charges, also known as smelter fees, came in at $80 per ton and 8 cents per pound. In 2023, those charges were at a six-year high of $88 per ton and 8.8 cents per pound, making this contract the first time in three years that the fees have declined.

One of the pivotal annual negotiations in the copper industry globally, the deal sets the price for millions of tons of shipments of copper ore. As the first negotiation between a large mining and smelting company, this deal will also now serve as a benchmark for the industry as a whole going forward.

The deal will end up being for only half of the volume of ore Antofagasta will supply to Jinchuan, as the miner normally will sell the other 50 percent of its yearly output in a second deal forged mid-year, according to one of the sources. It is not known if other Chinese smelters will follow the lead set by the deal.

That the fees have declined would point to a tightening of the market for copper ore, also known as concentrate, likely driven by China’s massive increase in processing capacity, as well as worries in the market over a vital mine in Panama.

Neither Jinchuan nor Antofagasta commented on the reported deal as of press time.