Hindustan Copper sees prices staying high

Hindustan Copper Ltd, the only miner of the metal in India, feels that copper is set to continue in comfortable zone for some more years despite fears of global recession keeping prices volatile for sometime.

“Globally, price of copper is expected to remain high in the next 3-4 years. The present scenario is highly favourable for copper mining industry and provides an opportunity to expand mines and develop new mines,” Shakeel Ahmed, chairman and managing director of Hindustan Copper told the company’s shareholders.

The recent turmoil being played out in the euro zone has taken a toll on copper prices — it has been extending losses on the London Metal Exchange (LME) over the past few days as worries about stalled economic growth in the West overshadowed robust growth in China’s copper imports.

However, long-term outlook remains bullish supported by some local factors as well, he said.

“Growing environment consciousness and an emphasis on using more energy-efficient appliances would also help to protect demand for copper in India. There is a ready market for copper concentrate in India due to huge deficit in mining as well as refining capacity. There has been insignificant investment in greenfield exploration of copper while preliminary exploratory studies have indicated that there is further scope of increasing reserves of the country,” he said.

After touching the $10,000-tonne mark at the LME in early February, copper prices have stabilised in the range of $8,700-9,200, Ahmed said.

High copper prices augur well for Hindustan Copper and not so much for other domestic companies, all of which are processors importing copper concentrate to feed smelters, he said.

“Profit margins of customer smelters such as Birla Copper (Hindalco Industries) and Sterlite would come under pressure due to high cost of copper concentrate and low TC/RC charges,” Ahmed said. TC/RC, or treatment charges (TC) and refining charges (RC), are indicators for copper price as the charges correlate with the percentage utilisation rate for global smelter capacity as rising charges indicate a surplus in the refined market, a position usually preceding a fall in copper prices.

On the status of Hindustan Copper’s greenfield ventures, Ahmed said that of the 20 mining permits applied, the reconnaissance permit at Balaghat is in the process of being finalised by Madhya Pradesh government while mining lease application has been submitted for Dhobani-Pathargora block in Jharkhand, which is being scrutinised at the district level.

The Kendadih, Jharkhand, mine lease is at the final stage of approval while execution of lease deed for Rakha mine is also set to be cleared, he said.