The Hindu Business Line : Hind Copper to outsource mining to Australian co

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Brisbane Feb. 19 Public sector Hindustan Copper is on the verge of signing a service contract with an Australian company in a bid to re-open a copper mine in Jharkhand that was closed several years ago.

"We are just ironing out the procedural details with Monarch Gold Mining Company to run the Surda Mines," Mr Satish Gupta, Chairman and Managing Director, Hindustan Copper, told Business Line here on the sidelines of a Confederation of Indian Industry meeting with Queensland mining representatives.

This would be a service contract where Monarch Gold would invest in equipment, manpower and technology. Hindustan Copper will buy the copper concentrate at a fixed rate.

"That rate is being finalised," he said.

Perth-based Monarch Gold Mining Company, which was set up five years ago, is listed on the Australian Stock Exchange. Still in mineral exploration mode, it made a net loss of A$ 18.6 million in 2005-06.

The Surda mine was one of five that were closed between 1998 and 2003 as global copper prices plummeted and inflicted losses on the company. That prompted its inclusion in the disinvestment list of the Vajpayee Government, which dressed it for sale by closing down the costlier mines.

"With the result there is no mine now functional at Ghatsila, where we have a smelter of 16,500 tonnes a year of processed copper capacity," said Mr Gupta.

"We have to source the copper concentrate from our mine in Malanjkhand, Madhya Pradesh.

"Once we re-open the mines in Jharkhand we can source the concentrate locally, and the Malajkhand concentrate can be diverted to the smelter at Khetri in Rajasthan, which is fed by imports."

The company's refining capacity is 47,500 tonnes of copper metal per year, 30,000 tonnes at Khetri and 16,500 tonnes at Ghatsila, near Jamshedpur.

It produces about 30,000 tonnes of copper concentrate from its mines and imports the balance at a price that is much higher than what it costs to produce in India.

Good times

Rising copper prices over the past three years have pulled the company back into profits and put the drive back in its management. "In 2003, prices had gone down to $1,500 a tonne; since then it has been rising; last year it touched $8,500. Now it is back to $5,000 plus. I hope it does not go down," Mr Gupta said.

Monarch Gold, which won the service contract in a global tender, is expected to start mining in a year's time and within two years produce enough ore to make 4,000 tonnes of copper.

Hindustan Copper, in which the Government holds 99.5 per cent of the shares, closed up at Rs 98 on the BSE on Monday.

"We are now investing in mine development, improving our processes and (filling) the gaps that have occurred (in human resources) considering the massive voluntary retirement scheme we had," Mr Gupta said. Staff at the company now number 5,000 as against 24,000 in 1995-96.

"We are recruiting engineers, management trainees etc, but we are also outsourcing other activities. If we again recruit a lot of people and if prices become volatile, the same old situation may prevail. We have learnt from the past not to have fixed manpower," he said.

The company had accumulated losses of about Rs 723 crore as of April 1, 2006, and a restructuring proposal is before the Board for Reconstruction of Public Sector Enterprises.

"With this window of opportunity provided by some good years of profit, we want to get back on track," said Mr Gupta. "So we are taking action on all fronts, reopening our old mines."

"There are other deposits in the area, at greenfield sites such as Chapri Sidheswar, where also we are looking at a joint venture or strategic alliance," Mr Gupta said. "Four companies have shown interest in the global tender we have floated."

More Stories on : Metals | Mining & Quarrying | Outsourcing

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