Published on December 4th, 2017 | by James Ayre0
Codelco To Begin Selling First Copper With Pricing That Accounts For Environmental Impact
December 4th, 2017 by James Ayre
Within the next few months, the Chile-based, state-run firm Codelco will begin selling copper priced so as to take the environmental footprint of production into account, Codelco chairman Oscar Landerretche has revealed.
The new pricing model will represent a first for the copper market — where the only real price differentiator is quality (its standardized otherwise). However, this follows recent moves made in the aluminum sector to do something similar — some aluminum producers now charge a premium for “low carbon” options and for aluminum processed using renewable energy capacity.
Regarding Codelco’s plans, customers will be able to choose a number of different options reflecting different parameters — carbon footprint, impacts on local communities, etc. — with pricing reflecting the option chosen.
Speaking at the Asia Copper Conference in Shanghai, Landerretche stated: “Very soon we will carry out the first decommoditized copper sale in which the customer will recognize, with external certification, the environmental attributes of the production as a principle part of the value offer. … This is imminent. Actually, it is going to happen during the next couple of months.”
The new initiative — dubbed “Responsible, Sustainable, and Traceable Copper” — is needed because of the “overly commercial” nature of the world’s economy currently, Landerretche stated.
“We dream of a decommoditized copper market that has differentiated prices for products with different certifications. We will do our part, but so must customers, consumers, and partner companies,” Landerretche continued.
Reuters provides more: “State-run Codelco is currently negotiating with a team of customers — a trader, a wire producer, and a final copper product producer — to establish a traceable system of certified copper. … Under the new terms, Codelco’s copper cathodes will be certified in 8 ways: carbon footprint, water footprint, territorial impact, community impact, human rights, equal opportunity and inclusion, occupational safety and health, and transparency, ethics and traceability of funds.”
The decision is partly the result of increasing interest amongst consumers of copper for low-carbon options — particularly amongst smelters in China, reportedly.
According to Landerretche, the project will initially involve 1–2 company divisions, but with the aim being for the module to eventually become the market standard.
Notably, the Codelco chairman also stated that he wanted Chile to create a new governed model for lithium mining as well, one that “defines the relationship between miners and local communities” ahead of an expected boom in lithium-ion battery usage (via energy storage and electric vehicles, mostly).
Image via Codelco