Jiangxi Copper earnings to soar on surging prices

PUBLISHED : Wednesday, 18 July, 2007, 12:00am
UPDATED : Wednesday, 18 July, 2007, 12:00am

Jiangxi Copper, the mainland's largest Hong Kong-listed copper producer, is poised to post solid earnings this year after its parent reported a 43 per cent surge in first-half revenue.

Sales at Jiangxi Copper increased to a record 20.1 billion yuan in the first half on increased production, Xinhua reported yesterday.

Global mining companies are benefiting from a surge in metal prices, buoyed by industrial expansion in the mainland.

From January to June, the group produced 6 per cent more or 243,000 tonnes of copper cathodes or refined metal, Xinhua said.

Gold output rose 8 per cent to 7.2 tonnes; silver was up 16 per cent to 204 tonnes.

Analysts expect the Hong Kong-listed company to report record high earnings on increased output for this year and next. Citing higher copper and gold prices, Trina Chen, an analyst at Credit Suisse, this month increased a forecast for Jiangxi Copper's earnings for this year by 18 per cent and 15 per cent for next year.

Ms Chen projected profit of 6.1 billion yuan this year, up 32 per cent from last year's 4.6 billion yuan.

'Following the strong rebound in the first quarter, we expect Chinese copper consumption to increase by 7-8 per cent in 2007 and 2008,' Ms Chen wrote in a sector report dated July 6.

'We see the copper market remaining tight in 2007-2008.'

The mainland, the world's biggest consumer of copper, zinc and lead, will adjust taxes for metal mining to reflect the scarcity of resources, Bloomberg reported, quoting a statement from the Ministry of Finance.

Based on the new tax rate, copper miners must pay seven yuan for each tonne of ore while lead and zinc miners must pay as much as 20 yuan per tonne, effective from August 1.

The ministry did not disclose the previous tariff levels.

Pan Qifang, Jiangxi Copper's company secretary, said the company had yet to receive any notice of the tax changes.