Hindustan Copper Ltd divestment move soon

The proposal to offload 20% stake in Hindustan Copper Ltd will be placed before the Cabinet Committee on Economic Affairs in two weeks.

The plan is to sell 18.4 crore shares (out of a total 92 crore) having a face value of Rs 5.

The mop-up, expected to be around Rs 4,000-5,000 crores, will partly fund expansion plans of the company.

While 10% will be fresh equity, another 10% will be Government of India holding. The Centre currently has 99.5% stake in HCL.

Hind Copper posted a net profit of Rs 154 crore for the year ended March 31, 2010, against a loss of Rs 10 crore in the previous fiscal.

The turnaround was thanks to higher prices on the London Metals Exchange (LME) and better corporate performance, Ahmed said.

Ore production in the last fiscal rose to 3.6 million tonnes against 3.2 million tonnes in the fiscal preceding the last.

Copper production was at 35,000 tonnes against 28,000 tonnes previously.

Ahmed said he did not see the current crisis in Europe having any impact on copper prices since the largest consumers of copper are China and the US.

He foresaw copper prices on the LME hovering in the $6,900 per tonne range in the near future. In 2008-09 the average price was $5,863 per tonne.

Meanwhile, Rajasthan has approved fresh mining leases to Hindustan Copper Ltd (HCL), India’s only vertically integrated copper producer, in Malanjkhand.

The lease area comprises two mines: Baniwali Ki Dhani, spread across 36.1 square kilometers, and another, which the company did not name, which spans 1,207 km.

Together, the mines have 85 million tonnes of reserves of 0.41 average grade of copper.

HCL is also pursuing leases in Malanjkhand II but, according to Shakeel Ahmed, chairman-cum-managing director, “there are disputed claims” which is stalling the move. For Baniwali Ki Dhani, pre-application bids have been completed, HCL may now seek a mining partner.

HCL is also expanding capacity from 3 million tonnes to 12 million tonnes. Ahmed said approval for expansion come from the ministry of mines.

Then the proposal will go to the Investment Promotion Board, followed by the Planning Commission for their respective approvals.