Sales of copper concentrates from Oyu Tolgoi exceeded production in April, leading to a drawdown in warehouse inventories held on the China-Mongolia border. Oyu Tolgoi concentrates sales during the month totalled 68,000 dry metric tonnes, up from just 48,000 dmt in the whole of the first quarter.
Stronger sales from OT have been felt recently in the Chinese market for copper concentrates, where rival miner Erdenet has been selling its feed to smelters with progressively higher treatment and refining charges (TC/RCs). While TC/RCs for waterborne imports have held stable or in some cases dropped, the terms that Erdenet have achieved have jumped as a consequence of higher rail charges, an outage at Jinchuan’s smelter in Gansu, and increased competition from Oyu Tolgoi.
Turquoise Hill has now signed sales agreements for 94% of its 2014 output, which is expected to hit 135,000 to 160,000 dmt, as well as 91% of 2015 output. The miner has also signed frame contracts for 84% of production for up to eight years.
Market sources said delays in signing annual contracts arose partly from disagreements over the pricing of gold contained in the concentrates, which averaged around 18 grams per dmt in the first quarter. But with the supply agreements now in place and sales accelerating, Turquoise Hill is focused on reducing concentrates inventories to six to eight weeks of production by the end of the year, it has said.
The company realised a net loss of $50.6 million in the first quarter, as sales lagged output during the period.
Sales of copper concentrates from Oyu Tolgoi exceeded production in April, leading to a drawdown in warehouse inventories held on the China-Mongolia border. Oyu Tolgoi concentrates sales during the month totalled 68,000 dry metric tonnes, up from just 48,000 dmt in the whole of the first quarter.