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Hindustan Copper to spend ₹5,500 crore on expansion

Hindustan Copper (HCL) will spend Rs5,500 crore over 6 years to expand its production capacity by six times to up to 20 million tonnes per annum (MTPA)

New Delhi: Hindustan Copper Ltd (HCL) will spend Rs5,500 crore over 6 years to expand its production capacity by six times to up to 20 million tonnes per annum (MTPA), a top official of the company said on Thursday.

HCL has “very ambitious" expansion plans, the company’s CMD Santosh Sharma told reporters here. “We have been working till date with a target of expanding to 12.4 million tonnes of copper ore production per annum. Now we have set our revised target at 20 million tonnes (MT)," he said.

The Cabinet had yesterday approved a fresh equity issue of 15% by HCL which will help the state-run company raise over Rs900 crore. Sharma said the company is aiming to enhance its capacity six times from present 3.6 MTPA to 20 MT by 2023-24.

“The Capex requirement for the mine expansion plan is Rs5,500 crore which is spread over next six years," he said.

Last year, HCL’s capex was close to 600 crore. Right now the company is catering to around five per cent of domestic copper demand and aspires to take it to the level of 30% and it has reviewed its expansion plan, Sharma said.

“We have come to conclusion that we can grow up to 20 million tonne by 2023-2024 and for that we have already chalked out action plan and we will be working on that action plan. This will be supported by our exploration activities also," he added.

The company has a very ambitious target, the CMD said, adding that funding was not an issue for the expansion. It will fund the capital expenditure through internal accruals, equity (QIP), and debt in a phased manner.

Giving the break up, he said that funds from the internal accrual may be to the tune of 300-500 crore per year within the span of six years. With regard to equity he said it will depend on its requirement.

“Debt also (will be) 1:2. The debt equity ratio in the mining company is 1:2 so in that ratio we will relate," he added.

Besides, the company said that it will also spend Rs175 crore for exploration activities spread over three years. It will issue 13.87 crore fresh equity shares, to the extent of 15%, which will bring down government stake in the PSU to 66.13%, an official statement had said.

The government holds 76.05% stake in the PSU at present. At the current market price, issuance of 15% fresh equity would garner Rs900.6 crore to the company.

“HCL will use the proceeds of Qualified Institutional Placement (QIP) to meet its expansion/capex plan which would create employment opportunities for 9,300 persons approximately," the statement had said.

Expansion projects of HCL are located in the states of Madhya Pradesh, Rajasthan and Jharkhand. Hindustan Copper, a vertically integrated copper producer, is primarily engaged in business of mining and processing of copper ore to produce refined copper metal.

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