Japanese smelters, whose major profit source is treatment and refining charges (TC/RCs) to process concentrates into refined metals, see the reopening of Highland Valley giving an advantage in annual TC/RC talks with foreign miners for shipments in calendar 2000, expected to start in October. Japanese smelters buy about 50 percent of the world's marketable copper concentrates from foreign suppliers per year. "If production at Highland Valley resumes, it will be good news for us," an official at a smelting company said.

"The reopening of the mine will help us seek better TC/RC conditions for shipments of next year." On Wednesday, workers at Canada's largest mine reached a tentative contract with management and they are expected to vote on the tentative agreement on Sunday to endthe dispute over wages. If the workers approve the deal, the first group of workers could return to work the following day, with full production beginning October 25.

The sources said that because of the closure of Highland Valley since May, foreign suppliers had offered relatively low TC/RCs to Japanese smelters, saying that supplies of copper concentrates were in a shortfall. Last month, Japanese smelters and the Escondida mine in Chile agreed on TC/RCs for shipments in the term year that started on July 1 at around $65 per tonne for TCs and at about 6.5 cents per lb for RCs, lower than TCs around $68 and RCs at 6.8 cents/lb set for calendar 1999 shipments, traders said. The sources said if the workers at Highland Valley return to work, shipments of concentrates are expected to start in late November and arrivals of concentrates in Japan will likely be late December to early next year.

If the workers disagree on the tentative accord, the closure of the mine will likely continue during the winter and thereopening would be next spring at the earliest, they said. Even if the concentrates from Highland Valley are not available until mid-next year, the smelters will not face a serious supply shortage as the closure of the mine had been factored in and they are shifting to more reliable concentrate supplies from mines in which they have made equity investments, they said.

"Some smelters may be forced to buy concentrates in the spot market if concentrates from Highland Valley are not available next year, but the amount would not be large as this factor has been well anticipated," an official at another smelter said. Highland Valley annually yields about 170,000 tonnes of copper contained in concentrates, a volume that translates into approximately 430,000 tonnes of concentrates, traders said. Under long-term contracts, a consortium of Japanese smelters has bought about 160,000 tonnes of concentrates from the mine a year.

In addition, smelters individually bought about 70,000 tonnes from Highland Valley,resulting in total Japanese copper concentrate buying of around 230,000 tonnes a year, they said. The long-term contract for the Japanese smelter pool expires at the end of calendar 1999, and as a result, Japanese smelters' buying of concentrates from Highland Valley will be limited to individual contracts, reducing the amount to around 180,000 tonnes a year from next year, they said.

The decline in concentrate buying from the Canadian mine will be covered by copper concentrate output at the Batu Hijau project in Indonesia and the Los Pelambres project in Chile. Seven Japanese smelters will buy about 400,000 tonnes of copper concentrates a year produced at Batu Hijau for at least the next 10 years.