ASX- and TSX-listed cop-
per producer Equinox
Minerals, which owns the Lumwana copper mine, in Zambia, has increased its copper in concentrate production to
43 835 t in the second quarter, as production performance at the mine continues to improve.
The company reports that its second-quarter production has increased by 44%, compared with figures for the first quarter, and by 80% compared with figures for the previous corresponding
period. Production for the first half of the financial year was 74 306 t.
Equinox reports an 11%
increase in operating profit to $91,9-million, and posted an
after-tax profit of $73,4-million in the June quarter.
The company achieved its lowest quarterly operating cost to date, at $1,19/lb.
The company reports that the mine and the process plant
operations continue to ramp up at the Lumwana mine, with the mine having achieved its design throughput during the second quarter. The process plant will achieve its design throughput in the second half of the year.
The mine is expected to produce 135 000 t of copper metal in concentrate for the full 2010 year, with costs averaging at $1,35/lb.
The Lumwana processing plant has a capacity to process
20-million tons a year, and Equinox says that it believes that it could be increased to 45-million tons a year, over a period of 18 months.
However, the company notes
that, given the very large resource
and long mine life of the Lum-wana operation, there is a poten-
tial to increase mine output
further to 35-million tons a year.
Such an increase will require an expansion of the processing
plant, and possibly the mining
fleet.
Equinox says that it has started
a two-phase feasibility study to investigate the expansion to 35-million tons a year in the quarter under review, with
results expected before the end of March next year.
Market Outlook
Meanwhile, Equinox reports that copper prices have experienced volatility during the second quarter of the year, with an average price of around $3,18/lb,
which is 8,2% lower than the first-quarter average.
This volatility reflects the uncertainty about the impacts of sovereign debt risk on the European Union, and the strength of the recovery in the US and China.
However, Equinox notes that copper prices were supported by confidence in the outlook for the medium- to long-term copper market.
Equinox reports that physical copper stockpiles monitored by the London Metals Exchange and the Sydney Futures Exchange continued to decline throughout the second quarter, indicating that the market for copper remains tight.
Despite the short-term volatility in global markets, demand for copper from China and, to a lesser extent, Europe and the US, was expected to continue to support the positive outlook for
copper markets over the medium-
to long term.
In other news, South African chemicals and explosives group AECI reports a near doubling of interim profits to R484-million for the six months to June 30, 2010, and reports a 127% rise in headline earnings to 238c a share, compared with figures for the corresponding period in 2009.
Revenue from continuing
operations rose 3%, to R5,4-bil-
lion, during the period and a cash dividend of 70c a share was declared.
AECI CEO Graham Edwards attributes the turnaround to an increase in sales volumes, which is supported by the fact that the group’s strategic growth projects, implemented over a three-year period, are all currently being ramped up.
The JSE-listed company saw volumes grow by 15%, mainly owing to its explosives business, AEL, which expanded its position in the African market and also cast its net into the South American and Indonesian markets.
Edwards says that the company
holds a strong market position in West Africa and East Africa, and is now focused on bolstering its business further in Central Africa, including Zambia and the Democratic Republic of Congo.
Further, South America will become the newest target for the company’s explosives business. “We are considering strategic
acquisitions and joint venture
opportunities with South American companies and we will be looking at leveraging our technologies into the continent,” says Edwards.
AECI’s newest expansions of its explosives and chemicals businesses have also given it the capacity to increase exports.
“Foreign sales for the reporting period were up 17,7%, and there is still a lot of room to grow
internationally, especially in our chemicals business, which has not yet seen much expansion outside South African borders.”
Over the past three years, AECI has spent around R2-billion on a number of big pro-jects, and Edwards notes that the company is now positioned to start cashing in on these projects.
“We expect big things for the company, depending on the ramp-up of our new plants and market conditions.”
AECI is now equipped with a new information security automation programme, an automated Shock Tube plant, which is also the only one of its kind in the world, as well as a new carbon disulphide plant and a poly-
acrylamide, a polymer formed from acrylamide subunits that can also be readily crosslinked, plant.
But Edwards acknowledges that conditions remain challenging for the company’s property
business, which will seek to take advantage of any upturn in the market.
“The recovery in global markets had a positive impact on our market volumes and on commodity prices and was of substantial benefit to the group,” he says.
“However, going forward, the strong rand remains a challenge for AECI’s mining and manufacturing customers and, hence, could impact on profitability across all businesses.
“Recent global reports highlight the potential for a financial slowdown, and AECI does not expect to see the same level of volume improvement in the second half-year as it did in the first half,” says Edwards.
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