Copper Brand Registration on the London Metal Exchange
The following article is published in Copper Worldwide, Volume 6 No 1. (www.copperworldwide.com)
“Melanie Wells established Metal Registration Limited in 2007, after working in the London Metal Exchange’s Physical Operations Department for fifteen years. She recognised a need in the industry for an independent consultancy, to advise metal producers and refiners on brand registration procedures for global metals exchanges and markets.
Melanie has helped numerous clients obtain Good Delivery accreditation on the LME, as well as The London Bullion Market Association, The London Platinum & Palladium Market, The Chicago Mercantile Exchange and The Shanghai Futures Exchange. She is also an Individual Member of the LME.
Here, Melanie sets out the benefits of registering a brand, the qualifying criteria and the process for registering a Grade A copper cathode brand on the LME.
Obtaining LME brand registration should be seen as taking out a commercial insurance policy. Having a registered brand enables a producer, in times of market oversupply, to deliver any excess cathode into the LME’s global network of approved warehouses in exchange for cash. The producer can be secure in the knowledge that it has a buyer of last resort for any surplus production or unsold inventory.
Registration has a distinct commercial benefit too, as brands approved as LME-deliverable tend to attract a premium over non-deliverable brands. LME accreditation also enhances a producer’s marketing potential, as fabricators recognise that its cathode quality has passed the LME’s stringent brand testing requirements.
Before a copper producer applies for registration, it is important to check that it satisfies the LME’s non-technical and technical criteria.
A producer’s Grade A cathode must:
- Have been produced for at least 12 months prior to a registration application, and
- Have a minimum annual production of 15,000 metric tonnes.
A producer must ensure that:
- Electrolytic refined or electro-won SXEW cathodes comply with the LME’s Special Contract Rules for Grade A Copper
- Production conforms chemically to the Grade A Chemical Specification, in accordance with one of three standards: BS EN 1978-1998 (Cu-Cath-1), entitled “Copper and Copper Alloys, Copper Cathodes”; Chinese Standard GB/T 467-2010, entitled “High Purity Copper Cathode (Cu-Cath-1)”; or American Standard ASTM B115-10, entitled “Electrolytic Copper Cathode (Cathode Grade 1). For details, please visit the link: http://goo.gl/n1lXFD
- Cathode bundles are marked with a unique identifier. Bundles must not exceed four tonnes, be uniform, stable and each must be securely strapped to withstand many handling and transportation events. The LME does not stipulate a minimum piece-weight, meaning that registered cathodes can range from, for example, 40 KG to a maximum of 180 KG. Registered cathodes typically measure 1.0 metre square, though cathodes currently LME-approved range from 0.9 metres to 1.3 metres square.
Historically, the current Grade A BS EN chemical specification was adopted by the LME almost 30 years ago in 1986, replacing the High Grade Copper Contract that was introduced in 1981. Previously, material was deliverable under its Standard Copper Contract, which had been introduced as long ago as 1898, following the original Copper Contract specification from 1883.
Once both non-technical and technical criteria have been met, LME registration can be applied for. The application process breaks down into three stages:
Stage One – Documentation
Initially, producers are asked to provide an information dossier, which must be submitted via an LME Member Company, giving details of financial, operational and technical aspects of their refinery operations. Once the LME is satisfied with the documentation provided, it will indicate that the producer should proceed to the next stage.
Stage Two – Sample Preparation
The LME requires that producers prepare a total of 1,800 MT for testing by three (from a current list of 22) nominated LME-approved fabricators, each receiving three test lots of 200 MT. In some cases, the LME may request that lots are randomly tested by one of its accredited samplers and assayers. The application then proceeds to the final testing stage.
Stage Three – Physical Testing
The nominated fabricators undertake separate evaluations on the test lots at their works, in accordance with two benchmarks, Standards BS EN 1978:1998 and BS EN 1977:2013 (cu-ETP1 (CW003A), “Copper and Copper Alloys” and “Copper Drawing Stock (Wire Rod)”, respectively. Upon completion of their tests, the fabricators will submit to the LME detailed reports comprising test data, information on the physical appearance of the cathodes, comments on the testing process and finally, confirmation as to whether the cathodes complied with the minimum requirements.
The LME’s Copper Committee, subject to receiving satisfactory test reports from each of the three fabricators, then issues a recommendation to the Executive Committee that the brand is listed. The LME issues a notice to Members, confirming the approval of the producer’s brand and that it constitutes ‘Good Delivery’ against its Copper Grade A Contract, with immediate effect.
From beginning to end, the LME’s brand registration procedure can be expected to take anything from nine months up to two years, even longer in some instances. The speed and cost of the application process is determined by a number of factors, including timeliness and completeness of paperwork, commercial terms with fabricators for testing, and preparation and shipment of test lots. Paperwork errors, omissions or substandard quality or bundles of test lots can lead to delay or outright rejection, so getting everything right is crucial.
Given the complexity of each exchange’s requirements, producers come to Metal Registration for our extensive knowledge of these processes. Our ability to avoid costly and time-consuming errors and our long-established relationships with all stakeholders enables us to avoid the most common pitfalls. With producers often lacking in-house expertise and resource to draw on, engaging a dedicated consultancy helps to keeps the application process on track.
There are currently 88 brands registered under the LME Grade A Contract, originating in 28 countries. The table below lists all Grade A brands registered on the LME over the last ten years, in chronological order.”
|Brand Listing Date||Brand Name||Producer Name|
|08/06/2005||HR||Pan Pacific Copper Co., Ltd.|
|07/07/2006||STERLITE T||Vedanta Limited|
|21/12/2006||ONSAN I||LS-Nikko Copper Inc.|
|21/12/2006||SUMIKO-S||Sumitomo Metal Mining Co Ltd|
|21/12/2006||CCCP||Corporacion Nacional del Cobre de Chile|
|25/04/2007||JCC||Jiangxi Copper Company Ltd.|
|09/05/2007||BIRLA COPPER II||Hindalco Industries Limited|
|10/10/2008||DJ-A||Daye Nonferrous Metals Co., Ltd|
|22/10/2008||SR-P||Pan Pacific Copper Co., Ltd.|
|22/10/2008||TAMANO-P||Pan Pacific Copper Co., Ltd.|
|17/12/2008||PSR ISABEL||Philippine Associated Smelting and Refining Corporation|
|17/12/2008||BCH||Boliden Harjavalta Oy|
|24/06/2009||PIRDOP||Aurubis Bulgaria AD|
|24/06/2009||SPENCE||Minera Spence S.A.|
|08/12/2010||JNMC||Jinchuan Group Co., Ltd.|
|20/07/2011||XGC||YangGu Xiangguang Copper Co Ltd|
|28/09/2011||PDSS||Freeport-McMoRan Copper & Gold Inc.|
|19/12/2011||SEPON||Minerals and Metals Group (MMG)|
|01/06/2012 .||PD*GO||Freeport-McMoRan Copper & Gold Inc|
|07/08/2013||UMMC II||JSC Uralelektromed|
|21/08/2013||XGC II||YangGu Xiangguang Copper Co Ltd|
|21/08/2013||PDMI||Freeport-McMoRan Copper & Gold Inc.|
|08/07/2014||JINXI||Dongying Jinxi Copper Co., Ltd|
|24/11/2014||CER||Mexicana de Cobre S.A. de C.V.|
|28/07/2015||TG-JL||Jinlong Copper Co., Ltd|
|26/08/2015||DJ-B||Daye Nonferrous Metals Co., Ltd|
|02/12/2015||NORILSK||JSC MMC Norilsk Nickel|