By Polly Yam
HONG KONG (Reuters) - China's copper industry is urging the government to allow the blending of raw material copper concentrate imports when they land at the country's ports, which will allow for cheaper though toxic supply to arrive.
Li Baomin, who is the chairman of China's biggest integrated copper producer Jiangxi Copper Co Ltd, proposed the government allow blending operations in "special administrative areas" at ports to help stabilize supplies of copper concentrates and cut buying costs, according to a report by China Nonferrous Metals News on Monday.
In China, special administrative areas include bonded warehouses and bonded areas at ports.
Li was acting in his role as a member of the National People's Congress (NPC), China's parliament, during its meetings that started on Saturday, and speaking for China's copper industry, Huang Dongfeng, a spokesman at Jiangxi Copper (HK:0358) , told Reuters by phone late Tuesday.
Jiangxi Copper does support the proposal, Huang added.
Delegates typically lobby proposals at the annual NPC meeting and the government may or may not accept the proposals.
If approved, firms would be allowed to import copper concentrates with high levels of arsenic, a toxic element that is often found with copper ore. Chinese smelters are currently prohibited from using concentrates with more than 0.5 percent arsenic content.
By blending at ports, China could reduce purchases of previously blended concentrates that meet the domestic standard that is currently supplied by traders.
More high-arsenic concentrates have come onto the global market in the past two to three years, particularly from mines controlled by Codelco in Chile and China's Chinalco Mining (HK:3668) in Peru.
As a result, Chinese smelters have imported more concentrates that are mixed with higher arsenic ores and standard grades from the trading houses and Codelco.
Since high-arsenic concentrates are prohibited at Chinese smelters, they demand higher treatment and refining charges than for standard and blended grades. Standard grade concentrates are typically lower than blended.
Import costs of concentrates are linked to treatment and refining charges.
The charges are paid by sellers to Chinese smelters, and then deducted from the smelters' buying price. That means a smelter would pay less for imports when the charges are high.
Chinese smelters were paid charges about $10 per tonne and 1 cent per pound above standard grade for Codelco's blended concentrates. They were paid about $20 to $30 and 2 cents to 3 cents more than the standard grade for some blended concentrates that contained more impurities than Codelco's, traders said.
Charges for spot standard concentrates to China had traded at about $85 to $90 per tonne and 8.5 cents to 9 cents per pound this month, lower than $97.35 and 9.735 cents for term shipments in 2016.