A few weeks ago I described the relationship between gross metal value in a concentrate and the net percentage of the gross that a seller will actually receive. You can read that article here.

Copper is sold in three main forms: refined copper cathode; copper concentrate; and blister copper. A very small amount of high grade copper is mined and direct shipped to a smelter (direct shipping ore, or DSO).

Refined Copper Cathode

Cathode comprises all of the refined copper sold, excluding copper scrap. There are two main sources of cathode: custom smelters that treat copper concentrates; and mining operations with “in-house” smelters and, usually, refineries.

Cathode is the purest form of copper and is the feedstock used to produce copper wire, cable, sheet, strip, tube, etc. It is also used in the production of alloys such as brass and bronze. Cathode is usually sold on a CIF (Cost, Insurance & Freight) basis and the price for the product is the LME (London Metal Exchange)  “A” Grade Copper Price (USD7,124/tonne at the time of writing). If the cathode is an LME registered brand having met the required quality and physical properties, it can command a price premium.

If the brand is not LME accredited, a discount to the copper price may be negotiated by the buyer. There are no other deductions to the value of the contained copper. Accordingly, sales contract administration and invoicing for cathode is quite straightforward and relatively easy, particularly when compared with the complexities of invoicing and accounting for concentrates sales.


Copper concentrates are produced by the  beneficiation, or upgrading, of copper ore. A typical copper ore would be 0.7% to 2% copper, a typical copper concentrate would grade around 25% to 35% copper.

Copper concentrates are either smelted and refined in-house, or sold to custom smelters. The concentrate may be smelted to produce blister copper for sale to a custom refinery, or the blister copper may be refined to cathode, which is then sold into the market.

Concentrates sales contracts are specialised and very complex. Concentrates are typically sold on a CIF, CIFFO (Cost, Insurance, Freight Free Out, buyer pays for unloading) or  FOB (Free Onboard Vessel) basis.

Concentrate value is first determined by agreeing upon payable copper content. This takes account of smelter losses and will typically be 95% to 97% of the contained copper. The next deduction will be the treatment charge, payable as USD per dry metric tonne of concentrate. There is also a refining charge payable as USD per pound or tonne of copper metal.

There are also penalty charges for deleterious elements. Typical elements which attract a penalty charge are: magnesium, aluminium, chlorine, cobalt, nickel, zinc, arsenic, mercury, selenium, antimony and bismuth. Some elements, such as uranium, could render the concentrate unsaleable. There are also some elements, particularly gold and silver, that are payable.

Finally, there will usually be a price participation factor which will allow the smelter to increase the treatment and refining charges should the copper price increase above a pre-determined level.

Blister Copper.

The custom blister copper market is the smallest. Blister is generally sold on a CIF basis and sales terms are relatively simple. They generally comprise the value of the payable contained copper, a refining charge, a deduction for penalty elements and payment for contained precious metals.

Last Word

Concentrate sales contracts are an absolute minefield for the inexperienced. Any company contemplating concentrate production needs to engage an experienced advisor at the earliest opportunity. Finally, a further complication arises when intermediaries are engaged to market the concentrate.


I would like to thank an associate of mine, who has many years’ experience in metal trading, for assistance with this article.