New Delhi: With 20 applications for new mining leases within India stuck in bureaucratic delays, state-owned Hindustan Copper Ltd is eyeing mines abroad to drive its expansion.
The company wants to begin with bidding for copper deposits in Afghanistan, its top executive said, and may team up with National Aluminium Co. Ltd (Nalco), with which it has an agreement to scout for mining assets jointly.
“We are trying to get the details of Afghanistan’s copper deposits that will be put up for bidding. If they call for expressions of interest, we will definitely be interested in taking part in it,” Hindustan Copper executive chairman and managing director Shakeel Ahmed said by phone from Kolkata. “We have the skill in mining and Nalco is cash rich.”
Ahmed said “depending on the need” there could be more companies that form a consortium.
Afghanistan is opening up its economy and wants overseas companies to mine its mineral resources, the country’s mining minister Wahidullah Shahrani said during a visit to Delhi last year. A Business Standard report on Tuesday said the government will float a tender next month for three copper and two gold deposits.
Hindustan Copper has cash reserves of Rs 450 crore.
Steel Authority of India Ltd has already said it will lead a consortium of steel companies to bid for iron ore deposits in Afghanistan’s Hajigak area, though the war-ravaged country is still unstable.
Hindustan Copper, which is on the government’s list for disinvestment, has 20 leases for prospecting and mining in India. But these, Ahmed said, are expected to take an indefinite time to materialize, requiring the need to find other means to grow.
In 2008, Hindustan Copper shut its 31,000 tonne smelter in Rajasthan as it turned economically unviable and the firm decided to focus on mining copper ore. The company produced around 3.6 million tonnes (mt) of copper ore in 2010-11.
It uses some of this in its 19,000 tonne smelter in Jharkhand. Surplus ore is outsourced to Hindalco Industries Ltd and Sterlite Industries India Ltd, which convert it into copper for HCL to sell in the market.
The company’s copper mines are in Jharkhand, Rajasthan and Madhya Pradesh and the only way it can boost production is to make them more efficient.
“All applications for leases are in different process(es) of decision-making,” Ahmed said. “There is no new mine that will be commissioned. By de-bottlenecking our existing mines, we will try to improve production by 8-10%.”
Hindustan Copper is targeting output of 35,000 tonnes of copper metal this fiscal year, up from 31,683 tonnes in 2010-11. It has a production target of 3.7 mt of copper ore.
In the international market, the market for copper is expected to pick up in a few months when demand from quake-hit Japan strengthens as a part of reconstruction effort. That in turn will harden prices in the second half of the year, Ahmed said. “But the average price for this full year should not be more than $9,200 a tonne from about $9,100 now,” he said.
Demand for copper, a bellwether for the economy, is expected to grow at around 7% this fiscal year in the domestic market, the pace nearly unchanged from last year, Ahmed said.
India’s copper production declined to 653,413 tonnes in 2010-11 from 683,436 tonnes in the previous year. Total installed capacity for copper is higher at 949,500 tonnes.