State-owned Hindustan Copper (HCL) has suspended production of cathodes despite their high global prices due to a surge in input costs.
Arun Kumar Shukla, chairman and managing director, HCL, told FE the company was getting a better realisation from copper concentrate than cathodes. “Copper miners like HCL capture around 95% of the copper LME (price) from sale of copper concentrate after discounting for treatment and refining charges,” he said.
Cathode prices at LME as on Wednesday was ruling at an elevated level of $10,331 a tonne for three-months forward contract.
HCL’s copper concentrate has a huge demand as it has very less proportion of elements like arsenic, antimony, bismuth, lead, mercury and other deleterious elements. “HCL copper concentrates is considered as one of the cleanest concentrates in the market and does not cause any difficulty in processing,” Shukla claimed.
Around 60% of HCL’s copper are sold to Hindalco and 40%, mainly coming from its Khetri mines, are sold through open tender- all at LME linked prices.
The average LME price of copper cathode was $9,641 a tonne from April 2021 to February 2022, while it was $6,685 a tonne for the same period during FY 21. “In March 2022, LME price of copper is ranging at around $ 10,000 a tonne after reaching a high of $ 10,730 a tonne on March 9, this year,” Shukla said adding the price of the metal was currently under pressure for Russia-Ukraine conflict and demand concerns in China, responsible for more than half of the world’s copper consumption.
HCL, he said, would resume cathode production, once all its mines became operational. The lease for Rakha mines would be renewed, that is lying closed since 2000. Restarting production from Rakha mines and opening of a new mining block at Chapri under Rakha mining lease area has been planned through the mine development operator (MDO) route, a first time adoption for HCL.
The copper miner has already started ore production from the Kendadih mine in Jharkhand. The underground mine expansion at Malanjkhad Copper Project was under construction below the present open pit mine, nearing exhaustion. The proceeds of a recently concluded QIP, through which the miner has raised Rs500 crore were being utilised in the expansion of the UG mines at Malanjkhand in Madhya Pradesh. “Expansion of underground mining capacity has a long gestation period. The benefit from the mine expansion with enhanced production is expected shortly,” Shukla said.
The company currently producing 4 million tonnes per annum of copper ore plans to take it up to 12.2 MTs by FY 29.