Sources from both companies confirmed the agreement with Fastmarkets during Asia Copper Week in Shanghai.
Arizona, United States-headquartered Freeport secured the deal at around 8am Shanghai time on Thursday and will meet with counterparts Tongling Nonferrous and China Copper (formerly Yunnan Copper) later today, but Chinese smelting sources added that a deal with those parties was a formality.
It remains to be seen whether Chilean miner Antofagasta, other miners as well as non-China based smelters will follow the benchmark.
The deal is the lowest annual benchmark for the industry since 2011 and marks a 23% decline on 2019 terms of $80.8 / 8.08 cents, agreed by Antofagasta and Jiangxi in mid-November 2018
The sharp drop in terms comes as spot levels paid by smelters for concentrates went as low as $50 / 5 cents this year following rapid copper smelting capacity expansions in China and an influx of higher-impurity concentrates from mines in Chile and elsewhere.
"It's probably going to put pressure on the private smelting sector in China and raises the risks of some cuts to production in China in 2020, so I think it's a relatively bullish outcome for the refined market," Deutsche Bank metals strategist Nick Snowdon told Fastmarkets following news of the agreement.
"Overall, I think it's a good deal for the miners and it certainly reinforces the bullish copper concentrate story," Snowdon added.
TC/RCs are discounts to the exchange copper price, paid to smelters for the costs of processing concentrates into refined metal.
[This article was first published at 2.23am London time on November 21. It was updated to include further detail and comment.]