Citic Resources Holdings' manganese mining and smelting operation, which it hopes to spin off on the stock market this year, saw first-half operating profit margin squeezed by higher electricity and labour costs. The resources unit of Beijing's first overseas investment firm, Citic Group, reported an operating profit of 122.85 million yuan (HK$140.48 million) in the year's first six months, up 6.9 per cent year on year. Sales jumped 39.5 per cent to 1.29 billion yuan. Operating profit margin fell to 9.5 per cent from 12.4 per cent. Executive director Rosanna Li So-mui said this was mainly because of higher electricity and labour costs. She would not disclose the manganese operation's power price increase, but said second-half profit margin was expected to be steady compared with the first half. Power costs typically account for 30 per cent of manganese smelting costs, a Guangxi Daily report said. Citic Resources has applied to Hong Kong Exchanges and Clearing to list Citic Dameng Holdings, which mines manganese ore in Guangxi province and processes it into manganese metal and chemicals. Citic Resources holds 80 per cent of Citic Dameng. Beijing raised retail power prices by about 5 per cent in November last year. It has also ordered local governments to raise power prices for energy-intensive sectors to control energy consumption and rein in pollution. Since June 1, the Guangxi government has launched a punitive power pricing scheme for energy-intensive industries. A company spokesman said it was not possible to verify whether Citic Dameng would be affected. Citic Resources chief executive Sun Xinguo said Citic Dameng's competitiveness would be enhanced when its 350,000-tonnes-a-year mine in Gabon comes on stream early next year, since ore there contains more than 40 per cent manganese compared with 25 per cent in Guangxi. Its Guangxi output was targeted to reach 100,000 tonnes this year. Citic Resources on Sunday posted a first-half net profit of HK$167 million, compared with a HK$307 million loss in the same period last year, thanks largely to its oil and aluminium operations returning to the black. The output of its mainstay Karazhanbas oilfield in Kazakhstan averaged 34,000 barrels a day in the first half. Full-year average is expected to be 35,000 barrels a day. Its Yuedong oilfield, off northern China, will start production later this year with peak output slated to reach 36,000 barrels a day in 2014.