Some of China's copper melting enterprises have begun to cut their production in an effort to resist price hikes of imported raw materials, according to sources from the copper industry.

A senior manager of a Chinese copper company said this move is in response to BHP Billiton's cancel of price participation article (PP article) and suppress of copper processing fees.

He said over the past more than 30 years, raw material suppliers and melting companies have always pursued the PP article. But recently the BHP Billiton not only largely suppressed the processing fees, but also unilaterally proposed to cancel the PP article in a bid to solely enjoy the huge profits brought about by copper price hikes.

"This is unprecedented in international negotiations. It is harmful to the mutually-beneficial cooperation and friendship between suppliers and melting companies, and is a malicious damage to long-term contract structure," he said.

Head of the China Smeltery Purchase Team (CSPT) Yang Jun said if there is no PP article, what smelting enterprises get cannot even meet their production cost.

At a CSPT meeting held on September 26, nine member enterprises demanded to raise processing fees to a reasonable level, he said. The nine enterprises account for over 80 percent of China's imported copper raw materials.

(Xinhua News Agency October 5, 2006)