Prospects are that they will rise further giving relief to loss- makers like Hindustan Copper and more profits for customs smelters like Birla Copper and Sterlite Industries. It will also help SWIL to complete its much delayed secondary copper smelter of 50,000 tonnes and help boost production all around and may well make India self-sufficient in primary copper production.

The increase in producer prices of copper in 1999 has been somewhat erratic. Prices during the first quarter of 1999 plunged and as on April 1, 1999 copper wire bar was Rs 95,500 and c.c.rod Rs 99,000, the lowest levels reached in 1999.

Thereafter prices started rising and by October 1999 were Rs 1,16,000 for wirebars and Rs 1,20,000 for cc rods.

Prices have now crossed $1,800 per tonne on LME and this trend is likely to persist. Though HCL is viable only around a price of $2,400 per tonne, the bitter experience of freer imports and lower duties on imports has forced the company to trim the costs. Director operations of HCL, Lokeshwar Prasad, told a recent seminar that the present cost of production of HCL was around 85 cents per lb, which could be brought down to 70-75 cents per lb. He said that HCL was now viable at around $ 1,700 per tonne.

HCL has a plan to increase smelting by debottlenecking, use of imported concentrates to the extent of 25 per cent, closing down of uneconomic mines and offering voluntary retirement for surplus workers.

During the year 2000, HCL may also be split into two entities one with Khetri Smelter with a capacity of 31,000 tonnes and Taloja cc rod plant with a capacity of 60,000 tonnes per annum.

The asset value of these two will be a 49 per cent stake in the new entity that willbe created with 51 per cent being offered to a strategic buyer. The company will also have its associated mines and should be an excellent proposition for private sector copper smelters in the country.

The Khetri Smelter can be expanded to 1,00,000 tonnes with relatively lower capital investment than what it costs to put up a new smelter.

The other part of HCL namely the profitable Malanjkhand Copper ore mine and, the Indian Copper Complex in Ghatisila, with its smelter and refinery accompanied with the closure of uneconomic mines and retirement of surplus workers should also be an attractive proposition for prospective buyers. HCL should be a profitable entity in its new avatar as two companies.

The new TC/RC rates now being finalised around $65 TC and 6.5 cents per lb RC should turn out profitable for customs smelters like Sterlite and Birla Copper. According to analysts at these rates, the effective revenue from TC/RC would be around $340 per tonne for copper produced which would more than cover thecash cost of production of smelters.

Added to this is the big duty differential of over 35 per cent between copper concentrates and copper finished products. However the somewhat sluggish demand for copper may be a dampener but with the recently noticed growth in the economy, demand may increase.

Already the Birla and Sterlite smelters are working at more than 100 per cent capacity. Sterlite will expand the smelter by 20,000 tonnes to 1,20,000 tonnes by April 2000 with marginal investments while Birla Copper would do debottlenecking and raise capacity of the smelter.

It is also putting up a special metals refinery which is expected to be ready by March 2000 which will add value to the anode slimes by recovery of gold and silver. It will also sell it captive jetty and bring in some Rs 300 crore to bring down the cost of interest.

The better margins in the copper industry will also help SWIL to complete its smelter and put it into production which will add to the overall availability of copper in thecountry and make India self- sufficient in primary copper during the year 2000, which will be the direct fruit of liberalisation since 1992.