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European zinc smelters seeking large TC/RC rises

HAMBURG (Germany) - European zinc smelters are seeking a big rise in 2008 concentrate treatment and refining charges (TC/RCs) because of large volumes of concentrates available globally, industry and trade sources said on Thursday.

The annual TC/RC negotiations are starting at around $330 a tonne for 2008, based on a London Metal Exchange zinc price of $2,500 a tonne, they said.

This was up from last year's European benchmark TC/RC of $300 a tonne based on an LME zinc price of $3,500 a tonne.

TC/RCs are fees charged by zinc smelters on mines to convert concentrate into metal. LME zinc MZN3 was quoted at $2,265 a tonne at 1715 GMT.

Smelters are sometimes seeking substantially more and TC/RC demands of $360 a tonne and more have been made, one executive said.

"There is a considerably higher volume of concentrate available this year compared to early 2007 and a large rise in charges is being sought by refiners this year," one trader commented.

"There is even talk of a $400 benchmark although this is unlikely to be reachable."

High rises in European energy prices this year was also provoking smelters to seek higher TC/RCs, he said.

Australia's Zinifex Ltd, the world's third largest zinc miner, said on Thursday price volatility in zinc markets was making it difficult for miners and smelting companies to agree on treatment fees for 2008.

Deals are traditionally finalised at the American Zinc Association conference in February.

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