Hindustan Copper to Increase Production This Fiscal Year as Prices Gain

Hindustan Copper Ltd., India’s sole miner of the ore, plans to increase production by 14 percent this fiscal year, aiming to benefit from record prices.

The state-run company, which owns mines in four Indian states, expects to produce 32,000 metric tons of copper in the 12 months ending March 31, compared with 28,000 tons a year earlier, Chairman Shakeel Ahmed said in an interview today in his Kolkata headquarters. Higher output and prices should lead to a gain in full-year profit, he said.

Copper rose to a record in London yesterday on speculation demand will outpace supply as the global economy extends a recovery. The price increased an average 33 percent to $7,767 a metric ton on the London Metal Exchange this fiscal year from $5,859 a ton a year earlier.

“Our profit and sales growth will be directly proportional to an increase in copper prices,” Ahmed said. “Profit after tax for the nine months ended Dec. 31 has already crossed the full-year income of last year.”

Hindustan Copper, which plans to sell shares this year, fell as much as 1.6 percent to 276.65 rupees and traded at 280.95 rupees as of 9:44 a.m. in Mumbai. The shares have lost 15 percent this year, compared with a 7.2 percent decline in the key Sensitive Index of the Bombay Stock Exchange.

The company will spend 36.8 billion rupees over six years to increase its mine capacity from 3.2 million tons to 12.4 million tons, Ahmed said.

Buoyant Outlook

The outlook for copper prices remains buoyant this year because supply lags behind demand by almost 500,000 tons, Ahmed said. Prices are unlikely to decline to less than $8,000 a metric ton and may even reach $10,500 a ton in the next three years, he said.

India’s government, which owns 99.6 percent of Hindustan Copper, plans to sell a 10 percent stake, while the company will sell an equivalent proportion of new shares. The share sale has been delayed from September.

“I can’t comment on the date of offer and the amount we are looking at raising,” Ahmed said.

The company doesn’t expect the delay to affect its expansion because it plans to sell excavated waste rock to builders of roads and railways. Hindustan Copper has 215 million tons of rock waste that can be sold over 10 years, Ahmed said.

“The money earned from rock wastes will be used to fund our expansion,” he said. “Our expansion plan will start from this fiscal and go up to 2017.”