The acquisition, which was advised by Rothschild Investment Bank, will be completed through a wholly-owned Australian subsidiary of Hindalco Industries Birla Mineral Resources Ltd for a total equity consideration of Australian $79.80 million. An agreement has been entered into by Hindalco Industries with Straits Resources Ltd (SRL), a listed entity, which owns 100 per cent of Straits (Nifty) Pty Ltd.
Aditya Birla Group chairman Kumar Mangalam Birla said at a press meet, The acquisition of Nifty, when completed, will elevate us to an integrated copper producer. Ownership in upstream mines is a strategic imperative for a smelter of our size, which we intend to scale up further to a global size in the foreseeable future.
Birla Management Corp-oration managing director Debu Bhattacharya, while explaining the rationale behind the acquisition, said that the profitability for an integrated smelter would improve with LME (London Metal Exchange) prices.
He added that the global competition for concentrate availability is increasing. World-scale companies, like BHP and Glencore, are becoming big trading partners, which seem to be creating a situation when TC/RC (treatment charges and refining charges) will be unremunerative, Mr Bhattacharya said.
At present, Nifty has a production capacity of 27,500 tonne per year of copper cathodes. The operating costs of the existing open operations are extremely competitive. Nifty also has a large under-developed sulphide resource, capable of producing up to 1 lakh tonne of copper in concentrate over an extended period. The project has total resources of 148 million tonne of ore, grading 1.3 per cent of copper.
Additionally, the 50 per cent interest of SRL in the Maroochydore joint venture is being acquired for Australian $10 million. The Moroochydore exploration project has resources of 51 million tonne of ore, grading 1 per cent copper.
Birla Copper is at the threshold of reaching a capacity of 2.1 lakh tonne, which requires to have its own feedstock, said Mr Birla. According to him, an integrated smelter is always better than a custom smelter.
Mr Bhattacharya explained that the sulphide ore from the Nifty mines will be used for the smelter, while the oxidised ore can be converted directly into cathode.
The Nifty project is located in the Eastern Pilbara region of Australia. The acquisition comprises the Nifty copper mine and rights to explore in the Paterson range, all located in the richly mineralised Paterson province.
The location of the Nifty mines will give Birla Copper a better freight advantage, which will be at least three times higher if concentrates are imported from the American continent. The production of concentrates will also be increased gradually through open pit mining.