HCL relies on concentrate to increase margins as cathode costs increase

HCL’s copper concentrate is in huge demand as it contains very low levels of elements such as arsenic, antimony, bismuth, lead, mercury and other harmful elements.

The state-owned company Hindustan Copper (HCL) has stopped producing cathodes due to an increase in input costs, despite their high global prices.

Arun Kumar Shukla, chairman and chief executive officer of HCL, told FE that the company is getting better recoveries from copper concentrate than from cathodes. “Copper miners like HCL make about 95% of the copper LME (price) from the sale of copper concentrate after treatment and refining fees are deducted,” he said.

Cathode prices on the LME as on Wednesday were at an elevated level of $10,331 per ton for a three-month futures contract.

HCL’s copper concentrate is in huge demand as it contains very low levels of elements such as arsenic, antimony, bismuth, lead, mercury and other harmful elements. “HCL copper concentrates are considered to be one of the cleanest concentrates on the market and cause no processing difficulties,” Shukla claimed.

Around 60% of HCL’s copper is sold to Hindalco and 40%, mostly from its Khetri mines, is sold via open tenders – all at LME-bound prices.

The average LME copper cathode price from April 2021 to February 2022 was $9,641 per tonne, while it was $6,685 per tonne in the same period of FY21. “In March 2022, the LME price of copper hovered around $10,000 per tonne, after which it peaked at $10,730 per tonne in March this year,” Shukla said, adding that the metal’s price is currently falling due to the conflict between Russia and Russia Ukraine and demand in China, which accounts for more than half of global copper consumption, is under pressure.
HCL, he said, will resume cathode production once all of its mines are operational. The lease for the Rakha mines, which has been in place since 2000, would be renewed. The resumption of production at the Rakha mines and the opening of a new mine block at Chapri as part of the Rakha Mine Lease have been planned via the Mine Development Operator (MDO) route, a first time commitment for HCL.

The copper miner has already started ore production from the Kendadih mine in Jharkhand. The underground mine extension at the Malanjkhad copper project was under construction below the current open pit mine and nearing depletion. Proceeds from a recently completed QIP which has raised the miner Rs500 crore have been used for the expansion of the UG mines at Malanjkhand in Madhya Pradesh. “The expansion of underground mining capacity has a long maturing period. The benefits from the mine expansion with improved production are expected shortly,” Shukla said.

The company, which currently produces 4 million tons of copper ore per year, plans to increase its volume to 12.2 tons by FY29.

https://www.financialexpress.com/industry/hcl-relies-on-concentrate-to-boost-margins-as-cathode-costs-surge/2469772/ HCL relies on concentrate to increase margins as cathode costs increase

Chris Barrese

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