Hind Copper will start work at all mines this fiscal

Shakeel Ahmed, chairman and managing director of Hindustan Copper, India’s biggest and only integrated copper mining company, feels that processing of mined products for value addition is actually value erosion for a power deficit India. While the company prepares for its follow-on public offer sometime in October, Ahmed tells DNA about the company’s plans. Excerpts:

How much copper do you mine and what is the smelting capacity?
Our mining capacity was 3.4 million tonne per annum (mtpa) of concentrated ore and last year we mined 3.6 mt of ore. Our smelting and refining capacity is 48,500 tonne per annum. One of the units, the Khetri copper complex of 31,500 tonne, is shut down.

Do you plan to restart the complex anytime soon and why?
No, we do not plan to restart the complex in the near future. The international treatment and refining charges, or the processing cost, is not viable for the company. To run the unit, we will have to import the concentrate and bring it to Khetri, which makes it unviable.

What are your expansion plans?
We plan to increase mining capacity four times to 12.41 mtpa. We don’t have any plans for smelting. It could be viable at the seashore, but not in the interiors where my facility is located.

What is the status of your mines?
We have eight mines. In Khetri we have three, Malanjkhand one and four in Ghatshila. In Khetri area, we have awarded tenders for two mines — Khetri and Banwas. Banwas was awarded a year back and the second one was recently awarded and the work will start in September. For remaining mines, tendering is in progress and by August 8, we will receive the financial bids. After that it will take another month or two for things to get streamlined, including approvals, etc. Another two months for resource mobilisation after which work will start; so before the end of this fiscal we will start work on all the mines. All this will need a capex of Rs3,677 crore over the next five years.

Many PSUs are diversifying into other activities. Do you have such plans?
As far as mining is concerned, we would like to consolidate our position in India and abroad. We are also interested in diversifying into other base metals and precious metals because the core competency required is mining, which we have. This is the only area we have in mind. In downstream products, there is not much for bigger players because the investments are small and there are far too many players. I would also like to point out that we do not consider copper as a risky business, its prices are going to be attractive in short, intermediate and long term.

Have you looked at some assets and what is the timeline for it?
We have had discussion with Rajasthan Mineral Corporation for gold mines and talks are on. We have also applied for some 20 leases for copper mines in the country and have received prospecting lease permission for one of them in Rajasthan; its exploration is likely to be started next month.

You had shown interest in Afghanistan’s copper resources...
There were talks that Afghanistan was planning to invite expression of interest (EoI) for its copper resources. If the deposit looks worthwhile we would definitely like to invest in it. The EoI is expected in a month or two.

What are your plans for power generation?
Mining is not a power-intensive business, smelting and refining are, but we are hardly in it. There was a time when smelting and refining of copper was considered a value addition. Now, as on date, 95% value is in mining. It’s a misconception that processing is value addition, for me it is value erosion. There are countries which are farming off these environmentally hazardous industries to developing economies such as India. Why should we set up processing industry at huge cost to the nation and environment?

But if we won’t do it, there will be somebody who will plug the gap…
Why that somebody should be an energy-starved country like India? I have shut down my facility in Khetri, the unions and some groups are up in arms, but I have put my foot down that it should not be opened.