• Sat
  • Jul 12, 2014
  • Updated: 7:29am

Jiangxi Copper up 9.5pc on earnings surprise

PUBLISHED : Thursday, 28 August, 2008, 12:00am
UPDATED : Thursday, 28 August, 2008, 12:00am

Shares of Jiangxi Copper surged yesterday after the mainland's biggest integrated copper producer reported better than expected first-half earnings and forecast solid selling prices.

Jiangxi Copper's H shares jumped 9.53 per cent to close at HK$12.64, while its A shares rose 4.02 per cent to 16.55 yuan (HK$18.90).

Chairman Li Yihuang said the price of the metal, which is used to make electrical wires and water pipes, was expected to stay between US$7,800 and US$8,000 a tonne in the second half.

'Although demand for copper could be damped by sluggish global economic growth and China's credit-tightening policies, a global shortage of copper concentrate supply will support prices,' Mr Li said yesterday after the Jiangxi-based metal producer reported a 31.98 per cent jump in earnings for the six months to June.

London Metal Exchange three-month copper futures were trading at about US$7,620 a tonne in early trade yesterday.

Investment bank Citigroup said it expected copper prices to jump in the next two years as speculative trade finished unwinding while copper mine production continues to miss forecasts.

Jiangxi Copper earned 2.77 billion yuan for the first half to June as a result of steady copper and sulphuric acid prices, a net gain from settled forward contracts of 256 million yuan, and a foreign exchange gain of 130 million yuan.

The price of sulphuric acid, a by-product of copper smelting, has increased to 1,500 yuan per tonne from 532 yuan last year.

That helped raise the gross profit margin of the company's chemical and other products to 77.87 per cent, compared with an overall gross margin of 14.91 per cent.

Separately, Mr Li said Jiangxi Copper was seeking a mainland builder as a partner in its Afghanistan copper project that it would jointly develop with China Metallurgical Group Corp for a total investment of US$4.4 billion.

The project, expected to take five years to build, included roads, a power plant, and a mine with an annual output of 200,000 tonnes of copper.

He said following the completion of the Aynak mine in Afghanistan and a copper mine in northern Peru, Jiangxi Copper would pursue investments in overseas mining resources.

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