Jiangxi Copper expects one-year output boost of 14%
Updated: 2009-09-22 08:11
(HK Edition)
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HONG KONG: Jiangxi Copper Co, the country's largest smelter of the metal, is "hopeful" about increasing production by 14 percent this year to reach its output target, after improvement in the availability of scrap.
Refined copper output may reach 800,000 metric tons as projected, Chief Financial Officer Gan Chengjiu said in an interview. Chairman Li Yihuang said in March that a lack of scrap, used to make the metal, was threatening output targets.
Scrap supplies plunged as the world's worst recession since World War II curtailed availability in developed countries. Copper on the London Metal Exchange doubled this year as China imported record amounts of the metal for stockpiling and to fuel a 4 trillion yuan ($586 billion) stimulus spending plan.
"With prices having gone up, scrap traders are releasing stockpiles they've been hoarding," Gan said in Shanghai September 19. "Furthermore, they're shipping in more from abroad."
Jiangxi Copper shares declined 1.2 percent to close at 38.68 yuan in Shanghai, compared with a 0.2 percent gain on the Shanghai Composite Index.
"Scrap supplies are still tight and are harder to access by small producers," Zhu Yanzhong, an analyst at Jinrui Futures Co, said from Shenzhen.
Scrap accounts for about a third of the Asian nation's refined copper production, according to China's Nonferrous Metal Industry Association. The country relies on imports for most of its scrap needs.
About 45 percent of Jiangxi's 900,000-ton annual smelting capacity uses scrap, with the rest sourced from concentrate, Gan said after a recent trip to Taizhou, Zhejiang province, a major copper scrap trading center.
Future capacity expansion "will be slow" because of a raw material shortage, Gan said. "To obtain adequate raw material supplies will remain an onerous task for us in the coming years," he said.
Output may increase only by 100,000 tons in the next two to three years, he said.
Jiangxi copper will increase self-mined copper concentrate, a raw material, to 200,000 tons in metal content in a "couple of years" from 160,000 tons, Gan said.
Afghanistan's largest copper mine, Aynak, in which Jiangxi Copper owns a stake, will start producing in 2012, with the first phase of output planned at 200,000 tons, Gan said. About half the production would be sold to the company as agreed, he said.
China's copper production rose 9 percent from a month earlier to 365,000 tons in August, the highest level this year.
Bloomberg News
(HK Edition 09/22/2009 page3)