THE European Commission is investigating the world’s leading copper producers over suspicions of an anti-competitive cartel in the copper concentrate market.

Officials from the Commission and the UK’s Office of Fair Trading raided the London offices of Rio Tinto and BHP Billiton on Monday. Investigators have also made inquiries at Somincor, the Portuguese state copper mining firm.

Freeport McMoRan, which operates Grasberg, the giant Indonesian copper mine, yesterday said that it had received a grand jury subpoena to provide documents relating to copper concentrate for an antitrust inquiry. Copper concentrate is an intermediate product, which is refined into 99 per cent pure cathode copper. The allegations of cartel activity come at a time when copper prices are depressed, and few companies are making money from the business.

A dispute between those who mine copper ore and the companies that refine the metal may be at the source of the inquiry. Falling demand for copper has cut prices for refiners. Industry experts suggest that independent copper smelters, who are suffering from low refining prices, may have complained to the Commission about concerted action by copper producers.

The Commission yesterday confirmed that its staff had made unannounced inspections at premises of big producers of copper concentrate in the UK and Portugal. The purpose, it said, was “to ascertain whether there is evidence of a cartel agreement and related illegal practices concerning the fixing of sales prices and sale conditions, customer allocation and market sharing”.

The Commission would not disclose reasons for the inquiry nor the identity of the companies investigated. A Commission spokeswoman said there were three possible reasons to launch an inquiry: a complaint by a customer or supplier; information from a whistleblower; or the Commission starting an inquiry on its own initiative. The spokeswoman said that the latter is unlikely in a specialised market, such as copper concentrate, and that since 1996, anti-cartel investigations have more often than not been the result of whistleblowers benefiting from the Commission’s leniency policy. “They denounce the cartel and hand over incriminating evidence in return for immunity,” she said.

The world produces annually some 10 million tonnes of copper concentrate, of which about 4.5 million tonnes is refined by independent smelters. BHP Billiton is the biggest supplier of copper concentrate to refiners, producing 608,000 tonnes of concentrate, some 35 per cent of the custom-traded market. The company yesterday said it was co-operating with the investigation.

Freeport McMoRan is also a large supplier to independent smelters, but Rio Tinto said yesterday that it refines most of its own copper. The company produces 890,000 tonnes per year, but only 30,000 is refined by independent smelters. Together, the three companies account for some 40 per cent of the market.

A spokesman for Rio said that ten investigators arrived unannounced at its London offices on Monday. “They asked for access and they had our full co-operation,” he said.