Hindalco eyes copper mine in Australia
Ravi Samalad 08 June 2010

The company is looking at acquiring a copper mine in Australia and has plans to revive the defunct company Mt Gordon Copper Operations

Asia's largest aluminium producer, Hindalco, is eyeing a copper mine in Australia. "Our objective is to get 40% of our need for copper concentrates from our own mines. We are falling short of that number," said Debu Bhattacharya, managing director, Hindalco Industries.

Mr Bhattacharya declined to divulge further details and said that the company is currently evaluating the options.

Aditya Birla Minerals Ltd, the Australian subsidiary of Hindalco, is also planning to re-open the Mt Gordon Copper Operations (BMGO). Mt Gordon was shut in January 2009 due to declining copper prices. MGO is currently under maintenance. It produced 57,093 metric tonnes of copper in FY10.

Meanwhile, Hindalco's net profit jumped 711% at Rs3,925 for the year ended March 2010 from Rs484 crore in FY09. The stock fell 5.81% in today's trading session at Rs132.20 from Rs140.35 (yesterday's close) on the Bombay Stock Exchange (BSE).

The BSE metal index has dropped 20% from 17,321.12 to 13,888.55 (as on 8 June 2010) since May 2010. Hindalco's stock has slipped 14% this year.

The company produced 3,32,000 kilo tonnes (KT) of copper in FY09 and plans to ramp up the production to 3,37,000KT next fiscal. The company's copper business revenue increased by 13% to Rs12,575 crore and earnings before interest, tax and depreciation (EBITD) jumped from Rs374 crore to Rs1,003 crore. Hindalco's copper sales stood at Rs12,575 crore in FY10 (up 13% from Rs11,098 crore in FY09).

The company's copper business, which benefited from higher contracted treatment charges and refining charges, lost Rs750 crore on lower by-product credit, such as sulphuric acid. The three-month copper contract prices have dropped 24% from $8 per pound in April 2010 to $6.10 per pound (as on 8 June 2010) on the LME.  Mr Bhattacharya said that he is not pessimistic about the future trend in aluminium prices and said that Europe should not be looked at as the only market. 

Hindalco reported net sales of Rs19,536 crore for the year ended March 2010. The company's aluminium revenue fell 11% at Rs48,091 crore due to prices and subdued demand in the first half of FY09. The three-month aluminium contract has dropped 24% since its peak in April 2010 of $2300/tonne to $1750/tonne as on 8 June 2010 on the LME.

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