Hindustan Copper Ltd (HCL), the nation’s sole copper ore producer, plans to increase its mining capacity by about six times, from the current 3.6 million tonnes per annum (mtpa) to 20 mtpa in six years. The company sold about 36,000 tonnes of copper products in India in FY18, and aims to supply nearly 2 lakh tonnes after the envisaged mines expansion.
On the sidelines of the recently concluded MMMM (Minerals, Metals, Metallurgy and Materials) expo in New Delhi, organised by International Trade and Exhibitions India, Santosh Sharma, Chairman and Managing Director of HCL, spoke about the company’s production, expansion and extraction plans. Excerpts:
HCL recently revised its mining capacity target from 12.3 mtpa to 20 mtpa. What triggered this revision?
We have money, resources and support from the government. We are also allowed six years to reach to that level. What else do we need? The only thing we have to do now is to expedite the growth to 12.3 mtpa from 3.6 mtpa and then gradually to 20 mtpa.
Can we expect increased ore production to some extent by 2021?
Yes, but not significantly. Because mining needs a long gestation period. For three years it would be just construction. Operation might start only after the third year. Further, a ramp-up takes three-four years.
But do we have the smelter capacity to produce metal from the additionally available ore?
The smelter capacity is not crucial. What is essential is to produce MIC (metal-in-concentrate). Therefore, Hindustan Copper’s current priority is not to install a smelter. In India, smelting capacity is already abundant. Our domestic demand is 6.5 lakh tonnes whereas the installed capacity is 10 lakh tonnes. For the production of the metal, we can easily sell the MIC to those who already have smelters. We will think of installing the smelter when we actually produce more ore.
But smelter installation also takes a long time…
The construction of a smelter takes only one-and-a-half to two years. Whereas expanding the mining capacity takes five-six years. So we will start our smelting business after three years. HCL’s current smelting capacity is 70,000 tonnes per annum (primary- 20,000 tpa, secondary - 50,000 tpa).
How do you plan to fund the ₹5,500-crore capex estimated for mining expansion?
It will be through market funding, debt and internal accruals. About ₹1,000 crore will be raised from a QIP likely to be launched in two months. Another ₹1,600-1,700 crore will be in the form of debt and around ₹2,500 crore from our own accruals.
Can you tell us about the recently commissioned extraction plant? How much will it contribute to the operating and net profit of the company?
The extraction plant in Madhya Pradesh was commissioned to extract gold and silver from over 100 mt of copper ore tailings accumulated over a period. Tailings are the waste products generated during the recovery of minerals. The plant can extract 900 grams of gold, 11 kg of silver and approximately 5,000 tonnes of silica sand on a daily basis. We will analyse the results from this plant based on several factors and decide on installing a similar facility in our two other mining locations, too, in Rajasthan and Jharkhand.
The raw material cost in this case is almost zero and we have to spend only on refinery charges (RC). Therefore, ‘revenue adjusted for RC charges’ will be our income from this operation. The operating profit will be around ₹100 crore and the net income will be ₹60-70 crore. We will see it contributing fully from next year. It will not come to full capacity within a day. After starting production, there will be a ramp-up of the capacity, which is going to take three-four months.
How is the current demand for copper in India?
The demand is 6.5 lakh tonnes. HCL currently caters to over 5 per cent of the domestic demand. By expanding the mining capacity to 20 mtpa, we will be able to cater to 30 per cent of the demand, which will be about 2 lakh tonnes.
Has the shutdown of Sterlite’s plant in Tamil Nadu impacted your business?
We work independently and haven’t been impacted much. Premium (over LME prices) levels, too, haven’t increased and are almost constant. Indirectly, we got the opportunity to utilise our capacity to 100 per cent.