More intriguing is the premium for high grade material. Miners such as Highland Valley and Pelambres have achieved reductions of around dollar 2/dmt & 0.2 not c/lb on the standard grade benchmark. Assuming 40 percent Cu for high grade and 30 percent Cu for standard, we can compare combined charges per unit of copper. On this basis the high grade producers have won a discount of over 18 percent to the benchmark TC/RC. Why are the consumers ready to pay such a significant premium for high grade material? One reason is that with the surge in high grade arisings in the 1990s many smelters adapted to higher grade material. Now that it's less abundant they miss it. Our figures show that from just 10 percent of custom material in the mid 1990s, the high grade share of supply jumped to 25 percent in 2001. Since then it has dropped back to 20 percent.
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