MANILA (Reuters) - Glencore International (GLEN.L) will resume operations at the only copper refinery in the Philippines by June or July, six months after a fire halted its operations, a company official told Reuters on Tuesday.
Philippine Associated Smelting and Refining Corp (PASAR), majority owned by Glencore, shut in January after a fire at its site in the central Leyte province, destroying anti-pollution devices.
“Our people are now busy refurbishing the plant because we want it to be in top shape when we operate by middle of this year, in June or July,” said J. Paul Tan, PASAR assistant vice president for industrial and community relations.
Tan could not give an estimate on lost revenue from the halt in copper processing and exports, saying only it was likely to be “significant”. The company earned $1.8 billion in 2010 from copper exports.
The smelter processes 720,000 tons of copper concentrate a year, or 60,000 tons a month, and the refinery has an annual capacity of 215,000 tons of cathodes, Tan said.
Market sources said in February that Glencore had been caught short by the shutdown, and was buying material to deliver against its commitments from ports in Europe as well as New Orleans.
But a resumption of output at PASAR would have little impact on the refined copper market balance because Chinese demand has not been as strong as expected due to Europe’s economic slowdown hurting its export markets.
It would also not be enough to halt steadily climbing copper processing charges, paid by miners to smelters to refine concentrate into metal, Beijing-based copper analyst Grace Qu at consultancy CRU said.
“Most market insiders expect the spot concentrate market will ease in the second half of this year. PASAR is just one of the factors... it’s not enough to stop the spot TCRCs (copper treatment and refining charges) from going up,” she said.
Qu said treatment charges for spot material had rebounded to $40-$50 a ton in March from $30-$40 a ton in February.
PASAR, which has been producing copper cathodes for export since 1976, operates in an 80-hectare site inside the Leyte Industrial Development Estate.
Acquired in 1999 by Glencore from the Philippine government, PASAR buys and refines copper concentrates from mines in Australia, Canada, Southeast Asia including Papua New Guinea, and South America.
PASAR is one of a handful of companies involved in downstream metals processing in the Philippines.
The Southeast Asian country wants its mining industry to shift to more value-added output by setting up more processing plants, instead of direct shipments of ores currently, to raise more revenue from its largely untapped $1 trillion mineral resources.
Tan said PASAR had bought new anti-pollution devices from Chinese suppliers, with the first of three shipments scheduled to arrive next month, to replace damaged equipment.
The smelter could currently be operated but could cause atmospheric pollution, he said in a telephone interview.
“So Glencore decided not to operate it because we will be breaking (environmental) laws in the Philippines.”
In addition to lost revenue due to the halt in copper exports, Tan said PASAR was also spending $4 million a month for employee salaries, electricity expenses and other costs.
Reporting by Erik dela Cruz. Additional reporting by Melanie Burton in Singapore; Editing by Ed Davies