Freeport to Break Away from Copper Benchmark Amid Declining TC/RCs

Freeport’s Shift from the Copper Benchmark System

Freeport McMoRan Inc. plans to break away from the longstanding copper benchmark pricing system to safeguard smelter profits. For decades, the industry has used a single benchmark to price treatment and refining charges (TC/RCs) for copper concentrates. These fees, which smelters deduct from concentrate value, typically account for about one-third of their revenue. However, record-low TC/RCs in 2025, driven by supply disruptions and increased smelter capacity, have hurt smelter margins.

Freeport’s senior VP of sales and marketing, Javier Targhetta, highlighted unprecedented market conditions. He stated that Freeport is unhappy that customers face losses due to plunging fees. With expectations for further declines in 2026, possibly turning TC/RCs negative, Freeport considers negotiating individual contracts instead of following the benchmark.

Market Evolution and Freeport’s Strategic Response

The global copper market faces structural shifts as smelters expand and concentrate supply tightens. Freeport’s move to bypass the benchmark reflects this evolution. The company recently built its own smelter, Atlantic Copper in Spain, sourcing concentrates both internally and externally. This vertical integration intensifies concerns about unsustainably low TC/RCs.

The 2025 benchmark, set by Chile’s Antofagasta, reached record lows with a treatment charge of $21.25 per ton and refining fees at 2.125 cents per pound. Meanwhile, spot market transactions saw fees dropping below zero, a trend Targhetta dismisses as “nonsense.” He insists that Atlantic Copper will not accept zero or negative tolling fees, signaling a likely shift toward bespoke supply agreements in 2026.

SuperMetalPrice Commentary:

Freeport’s stance signals a pivotal change in copper concentrate pricing, reflecting broader industry pressures. Declining TC/RCs threaten smelter profitability amid rising costs and expanding capacity. If Freeport breaks from the benchmark, other producers may follow, leading to a fragmented market with individual contract negotiations. This could increase price volatility but also better protect smelter margins. Market participants should watch closely how this shift influences copper concentrate trade and processing economics in 2026.