EXW, FCA, FOB or CIF? Incoterms for African copper

Incoterms are short codes, published by the International Chamber of Commerce, that say where the seller's job ends and the buyer's begins. In copper they also decide the price, because transport from the Copperbelt to the sea is long and expensive.

The ones you will see

EXW (Ex Works). The buyer collects from the seller's site, such as a mine, plant or smelter gate, and handles everything after that, including export. Cheapest price, most work and risk for the buyer. Common for truck-by-truck buying from smelters and mines.

FCA (Free Carrier). The seller hands the goods over at a named place, often a bonded warehouse in Dar es Salaam, Durban or Kolwezi, cleared for export. The most common term for African cathode trades because it lets the buyer inspect in a neutral warehouse.

FOB (Free On Board). The seller loads the goods onto the buyer's ship at the port. Used for sea freight in bulk, more often for concentrate.

CFR and CIF (Cost and Freight / Cost, Insurance and Freight). The seller pays freight to the destination port, and under CIF also insurance. Risk still passes to the buyer when the goods are loaded at the origin port. Many buyers don't realise this.

DAP and DDP. Delivered to a named place, with or without duties paid. Rare in this trade from Africa because the seller carries everything.

What works

• FCA bonded warehouse for cathode, with inspection before payment.
• EXW smelter or mine gate for buyers who have trucks, people on the ground, and a clear sampling and payment process per truck.
• FOB for large, contracted shipments with an instrument in place.

What causes trouble

• "CIF China, 100% payment after inspection at destination." The seller would ship millions of dollars of copper across an ocean with no security and no control over the buyer's inspection. No real seller accepts this, which is why buyers who insist on it search for months.
• Incoterms with no named place. "FCA Africa" is meaningless. Always name the warehouse, port or site.
• Prices without an incoterm. An LME discount means nothing until you know where the copper is. Compare offers only on the same incoterm and place.

Price and incoterm go together

The same cathode might be offered around LME −16% EXW at a Congolese smelter and around LME −8% to −10% FCA in a Dar es Salaam bonded warehouse. The difference is transport, export, time and risk. See LME discounts.