MMG faces production challenges this year
Australian zinc mine to close, and copper output costs rise in Laos and Congo
MMG, the overseas nonferrous metals mining unit of state-owned metals trading major China Minmetals, will face more challenges this year after it posted a better than expected profit for 2014.
They include the closure of its mainstay zinc mine in Australia in this year's third quarter, and higher production costs from harder to process copper ores in Laos and the Congo. MMG will also have to book more costs from its Las Bambas copper mine in Peru, which is under construction, until it starts generating revenue in the first half of 2016.
"2015 will bring many operational challenges," Marcelo Bastos, chief operating officer of MMG, said yesterday.
MMG on Tuesday night reported a net profit of US$103.8 million and revenue of US$2.48 billion, both flat compared to 2013 levels.
Last year's net profit was much higher than the US$68.4 million average estimate of five analysts in a Thomson Reuters survey. They estimated a net loss of US$6.2 million for this year.
"The beat was primarily driven by [an 83 per cent rise in operating profit] at its Century [zinc mine in Australia]," Barclays analysts, who had expected a 15 per cent increase, said in a note.