Chile’s National Copper Corporation (CODELCO) is expected to sign an agreement with Minmetals, a Chinese metals firm by the end of the week. The deal would guarantee the company a fixed price on 55,750 metric tons of copper over the next 15 years.
In return for the copper, Minmetals would pay Chile US$550 million up front in anticipation of the future delivery of the copper. Chilean officials are currently finalizing negotiations with the company in London this week and hope that an agreement will be reached shortly.
“It is complex negotiation and we must ensure it is done well,” said Alfonso Dulanto, Chile’s mining minister. “All that we have requested as a directing body is that we are clear on every last detail.”
The agreement provides insurance against price variation over the next 15 years guaranteeing a fixed market for Chilean copper and set prices for a rapidly industrializing China. Under the new Chile-China Free Trade Agreement, the two countries are set to remove all tariffs on copper exports by the end of 2006.
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