Hind Copper to increase production

India’s sole copper miner Hindustan Copper has increased its borrowing limit to Rs 650 crore in order to meet an expanded production target of 12.41 million tonnes in the next five years. 

In a filing with the Bombay Stock Exchange, Hindustan Copper said its board had approved increasing the borrowing limit to Rs 650 crore and had cleared the formation of a joint venture with National Aluminium Company and Mineral Exploration Corporation for exploring and mining strategic minerals abroad.

Hindustan Copper had debts of Rs 469.88 crore on March 31, 2017. Long-term borrowings at Rs 205 crore account for 44 per cent of the total.

Credit rating agency ICRA had in May assigned a stable rating to Hindustan Copper after analysing its Rs 200 crore term loan and Rs 265 crore proposed fund-based working capital facilities.

According to ICRA, Hindustan Copper’s borrowing strength lies in its monopolistic status as the only company in India with access to large reserves of copper ore. Hindustan Copper’s healthy financial position and considerable financial flexibility since 2004 are positives for lenders as is the company’s success in reducing production costs.

The company has also built a portfolio of five byproducts: copper sulphate, sulphuric acid, reverts, anode slime and nickel hydroxide.

Hindustan Copper has embarked on six expansion projects in which it is expected to invest around $700 million (Rs 4,561 crore). The company plans to increase production from 2 million tonnes to 5.2 million tonnes in its largest mine at Malanjkhand in Madhya Pradesh. 

“We plan to build an underground mine under the existing open-cast one,” said Santosh Sharma, chairman and managing director, Hindustan Copper.

The Malanjkhand copper deposits, located 20 km from the Kanha National Park, contain nearly 70 per cent of the country’s reserves and contribute around 60 per cent to Hindustan Copper’s output of copper ore.

The company also plans to output in the Khetri, Kolihan and Surda underground mines, which account for 1.4 million tonnes of production now, to 3.4 million tonnes. Two projects in Banwas and Chapri-Sidheshwar are expected to account for another 1.1 million tonnes once these are made operational.

There are also plans to restart operations in the shut Rakha and Kenduadih mines, which together can produce 1.7 million tonnes of copper ore.

Analysts said Hindustan Copper's thrust on developing new mines would substantially increase production of the metal in its concentrate form. This, coupled with the use of better technology and higher labour productivity, would help Hindustan Copper reduce production costs, they added.

Backed by rising international copper prices, Hindustan Copper posted a 322 per cent increase in its net profit at Rs 28.55 crore in the September quarter as net income rose 187 per cent to Rs 519.33 crore. Net profit and net income in the year-ago period were Rs 6.77 crore and Rs 180.76 crore, respectively.

Copper prices on the London Metal Exchange have risen 30 per cent in the last six months, with the average price now at $6,900 a tonne.