Auto Sector : Growth Moderating

The cumulative production data for April-June 2012 shows production growth of 7.65 percent over same period last year when the growth recorded was 18.43 percent. The industry produced 1,700,675 vehicles in June 2012 as against 1,597,082 in June 2011.
The overall growth in domestic sales during April-June 2012 was 9.94 percent over same period last year. In April-June 2011 the growth rate was 15.14 percent. Passenger Vehicles segment grew at 9.71 percent during April-June 2012 over same period last year. Passenger Cars grew by 5.22 percent, Utility Vehicles grew by 50.85 percent and Vans grew by (-9.60) percent during April-June 2012 as compared to same period last year. The overall Commercial Vehicles segment registered growth of 6.06 percent in April-June 2012 as compared to the same period last year when the segment registered a growth rate of 14.10 percent. While Medium & Heavy Commercial Vehicles (M&HCVs) registered negative growth at (-11.99) percent, Light Commercial Vehicles grew at 19.92 percent.
Three Wheelers sales recorded marginal growth at 0.83 percent in April-June 2012 against 4.92 percent during April-June 2011. Passenger Carriers grew by 5.66 percent during April-June 2012 and Goods Carriers registered de-growth at (-15.09) percent during this period. Two Wheelers registered a double digit growth of 10.51 percent during April-June 2012 against 16.89 percent during same period in 2011. Mopeds, Motorcycles and Scooters grew by 6.60 percent, 6.79 percent and 29.14 percent respectively in the period of April-June 2012.
During April-June 2012 overall automobile exports registered negative growth at (-1.22) percent. Passenger Vehicles, Commercial Vehicles & two wheelers grew by 14.00 percent, 7.98 percent and 2.63 percent respectively in April–June 2012. Three Wheelers recorded de-growth at (-40.73) percent.

  Bosnia aluminium smelter cuts output by 13pct

Bosnia's top exporter, aluminium smelter Aluminij Mostar will close 12.5% of its smelting capacity due to lower metal prices and higher power costs and could cut more in September. Aluminij Mostar said that the company's board of directors took the decision unanimously with immediate effect. The company is in a very difficult position because of the high electricity prices and the lowest price of metal in the history of our operation. It had been planning to finish an upgrade of its foundry this year to boost annual output by 30,000 tonnes much of it destined for long term partner Glencore International but it was now unclear if the plan would be fulfilled.
The plant, a major employer in the southern town of Mostar, has repeatedly complained of high power prices and asked the state to subsidise them for strategic firms. The power price accounted for about 60% of the cost of producing each tonne of metal. Benchmark prices of industrial metals on the London Metal Exchange had fallen significantly and were unlikely to recover before the end of the year. Metal sector exports account for about 80 percent of overall output in Bosnia, where the economy is still struggling to develop since the end of the 1992 to 1995 Bosnian war. Aluminij alone exports about EUR 150 million worth of metal per year.
Cutbacks at the plant might also harm metal processors it supplies and cost jobs in a country where unemployment is already around 45%. It could also endanger metal supply deals with international partners. Aluminij, which produces around 160,000 tonnes of metal a year and has relied on relatively cheap hydro power, was hit in March by an increase of about 12% in electricity prices by Bosnia's EPHZHB utility. The utility has been hurt by a long-term drought and could not provide the agreed 125 MWH per year so the smelter had to import power at much higher prices.

  Base metals remain up on industrial demand

Base metals raised further INR 2 per kilogram in the local nonferrous metals market on increased industrial demand and reports of firming global trend. Traders said that increased industrial demand and reports of firming trend in global markets mainly kept base metal prices remain firm. In the national capital, copper mixed scrap and nickel (4x4) added another INR 2 each to INR 392 and INR 1,036 per kilogram to 1,039 per kilogram. Zinc ingot, lead ingot and lead imported also enquired higher by the same margin to INR 106 to INR 110, INR 130 and INR 128 per kilogram respectively. The following are metal rates per kg: Zinc ingot 106 to 110, nickel plate (4x4) 1,036 to 1,039, gun metal scrap 226, bell metal scrap 228, copper mixed scrap 392, chadri deshi 285. Lead ingot 130, lead imported 128, aluminium ingots 127, sheet cutting 129, aluminium wire scrap 134 and aluminium utensils scrap 128.

  Ashburton Minerals extends broad copper zone at Pokali

Ashburton Minerals has received 2 drill results from RC holes drilled at Charlies at Pokali, part of Mt Webb IOCG project in Western Australia, and they did not disappoint. Hole PKC027 returned 4 meters at 1.36% copper; 8 meters at 0.52% copper and 26 meters 0.31% copper. This hole contains copper mineralization over a 187 meter run, from 162 meters to end of hole at 349 meters with a bulked significant intercept of 78 meters at 0.26% copper from 162 meters to 240 meters. The results have extended the mineralization in this area to depth and westwards with copper mineralization remaining open at depth and along strike. The 4 hole drill program was targeting copper mineralization at east Pokali and The Gap area at the western end of Pokali hill. The other Hole PKC026 returned 4 meters at 0.76% copper; 22 meters at 0.34% copper and 23 meters at 0.20% copper.
The results have extended the mineralization in this area to depth and westwards with copper mineralization remaining open at depth and along strike. The target at east Pokali is defined by a copper anomaly almost 400 meters in length. Ashburton's drilling program consists of four deep RC drill holes targeting copper mineralization at east Pokali and The Gap area at the western end of Pokali hill. The target anomaly is substantially larger than prior copper anomalies in the vicinity and lies adjacent to the zone that has so far returned the best drill intercept from Pokali, namely 62 meters at 0.40% copper from drill hole PKC 024. This hole is almost entirely mineralized, averaging 246 meters at 0.22% copper. Results for the remaining two holes, PKC 028 and PKC 029 drilled at The Gap prospects are expected in approximately one week's time.

  Noranda Aluminium pumps USD 11 million into Jamaica expansion

Noranda Aluminium plans to start USD 11 million expansion of its harbor capacity at Port Rhodes in Discovery Bay this year. The local investment, along with plans to build a USD 45 million rod mill in the US, proved attractive because their value creation is largely independent from LME aluminium prices. Mr Layle Kip Smith president & CEO of Noranda said , “The opportunity to further expand harbour capacity in Port Rhodes represents not only a value-creating investment in our existing bauxite operation but also an investment in our long term relationship with the Government of Jamaica.” The project which follows on USD 6 million investments that raised the pier's capacity from 4.5 million tonnes to 5.4 million tonnes a year in early 2011 consists principally of harbor dredging and focuses on further reducing costs and providing greater flexibility for shipping activities. Last month, Ms Pansy Johnson president of Noranda Jamaica Bauxite Partners said that the project would start somewhere between Q4 of 2012 and the Q2 of 2013. Then she said that the timing of the start of the project would depend on the availability of the required specialized equipment and the dredging method that will be employed. There are a limited number of companies and limited units that will be able to handle this project.

  Chuquicamata operating normally – Codelco

Codelco's underground Chuquicamata mine is operating normally despite a strike by a group of contract workers. The main access road to the century old Chuquicamata which produced 443,000 tonnes of copper last year was blocked by Metalcav contract workers forcing Codelco to use an alternate access road. Codelco said that workers entered the mine without major difficulties; except for a delay in the entrance for workers of the A shift due to the road block on the Calama to Chuquicamata route. World leading copper producer Chile has in the past years been hit by a series of labor actions encouraged by record prices for the red metal. According to the contract workers federation, talks with the Metalcav contract workers broke down over demands for larger salary increases and heftier bonuses to end strikes. Early union leaders blocked access to Chuquicamata's industrial areas for three hours, Codelco said. Police forces had to be called in to free up access

Rambler Metals update on Newfoundland & Labrador projects

Rambler Metals & Mining announced that it has closed its previously announced private placement with Tinma International; a wholly owned subsidiary of a China based strategic investor. The company issued approximately 7.1 million shares at a price of USD 0.58 per share for gross proceeds of approximately USD 4.13 million Canadian. Completion of this subscription remains conditional only on admission of these new shares to trading on AIM and the TSX Venture Exchange. Following the issuance of these shares, Tinma will hold 22.7 million shares representing approximately 16% of the issued shares. Once again, this shows that with a good project it is still possible to raise financing and once again it is a Chinese company writing the cheques. Rambler is a copper and gold producer that has 100% ownership of the Ming Copper and Gold Mine in Newfoundland and Labrador's Baie Verte Peninsula in Canada. Earlier this week, Rambler announced the sale of its first lot of 600 tonnes of copper concentrate from the Ming Copper-Gold Mine. Provisional grade for the lot was 29.7% copper, 5.43 grams per tonne gold and 47 grams per tonne silver. A second lot of 800 tonnes of copper concentrate is awaiting assays for invoicing and provisional payment. Average tonnage rate and mill head grade for May was 455 dry tonnes per day and 1.49% copper equivalent, which increased in June to 585 dry tonnes per day and 2.16% copper equivalent.
Mr George Ogilvie president & CEO of Rambler Metals said , "The live commissioning of the copper concentrator is progressing smoothly, and on schedule. As we gain more knowledge of the process we will continue to maximize the tonnage throughput while increasing the mill feed grade by steadily blending in more massive sulphide ore, particularly from the 1807 zone. The eventual goal is to only process massive sulphide ore, which carries a much higher grade and increased margins. It is our objective to reach Commercial Production during the second half of 2012 with the first 5,000 tonne load of copper concentrate being shipped to market prior to calendar year end.”

  Alba boosts quality targets with Sigma Wave

Aluminium Bahrain focus on achieving sustainable annual savings of USD 250 million by year end has gained momentum with the recent launch of Lean Six Sigma Wave 7 initiative. The news initaitive introduced as part of Alba SmartWay is aimed at bringing about quality improvement and enhanced operational efficiency.
Mr Laurent Schmitt CEO of Alba, Mr Tim Murray chief finance & supply officer and COO Mr Isa Al Ansari met the new batch of Six Sigma Green Belt trained candidates who will be responsible for implementing eight approved projects that will pave the way into accomplishing Lean-Six Sigma Wave 7's overall goals.
The eight selected projects are expected to bring about an estimated savings of more than USD 10 million and their implementation target will be end December 2012.
Mr Schmitt said "Alba has always committed itself towards continuous improvement as a key component of its work culture and recognizes that this methodology provides a spot on route to operational efficiency and global competitiveness.
The launch of Six Sigma is a step that will enable the company to achieve not only substantial cost savings but also anchor quality as an integral part of all operational processes.
I like to wish the Lean Six Sigma Wave 7 team all success as they begin their task in implementing the targets for each of the eight projects. We are also confident that their success will pave the way towards launching a Six Sigma Academy with trained experts from Alba.”

  EMAL celebrates record production of two million tonnes of hot metal

Emirates Aluminium has achieved milestone in producing 1.5 million tonnes of hot metal. This is the fastest production achievement ever witnessed in the history of the global aluminium industry with the last seven months producing 500,000 tonnes of aluminium alone. Mr Saeed Fadhel Al Mazrooei president and CEO of EMAL said, "Excellence in all we undertake is evident in the fact that not a single pot has been lost since inception as well by the exceptional metal purity levels of 99.88% and above. The relentless consistency in performance by our employees reflects very highly on their dedication and commitment which has made these achievements possible.”
Mr Al Mazrooei said that more importantly, the record production was achieved with over 10 million work hours with zero Lost Time Injuries. This builds on the achievement of five million work hours with zero LTI in 2011 and further demonstrates the belief and ownership of EMAL's Core Value of Safety First, Last and Always. He added that the achievements we have made so far will encourage and drive us forward as we continue to safely and responsibly accomplish the ambitious goals we have set for ourselves.

  Jamaica government again explores possibility of aluminium production

Nearly 40 years after the plan was tout in one of the several failed regional integration initiatives, the Government is again exploring whether aluminium can be produced in Jamaica. However this time around, the minister with responsibility for the mining and energy sector is far more optimistic and has indicated that he will be providing additional information to the country by the end of September. In the early 1970s, three prominent Caribbean leaders Mr Michael Manley of Jamaica, Guyana's Forbes Burnham and Trinidad and Tobago's Mr Eric Williams proposed the construction of a regional aluminium smelter in Trinidad, using alumina from Jamaica and Guyana and energy from the oil rich Trinidad and Tobago. However, the initiative never got off the ground.
Mr Phillip Paulwell mining and energy minister of Jamaica said that based on a range of developments on the local energy landscape the conversion of alumina to aluminium is now within the country's grasp. In keeping with the approach of the ministry a ministry that is responsible for science, technology and innovation we have to look at increasing the value to the goods and services that we produce and we therefore are focused on how to build more value in Jamaica and with that in mind we are looking at the full range of mining opportunities to see how we can move to that ultimate level that we have been talking about for years.”
He said that there was a need to focus less on primary products and more on products at the end of the production process. I believe that by about the end of September I will be able to speak far more definitively in relation to the energy solution for the bauxite alumina industry that will enable us to ship less ore and more value added.
Also because we are moving to solve the energy problem we can entice businesses in this area to look now at Jamaica as a place where you can do the full range of processing. While making the case for Jamaica to be engaged in aluminium production, the minister sent another signal to the Jamaica Public Service Company regarding the need for that company to embrace the Government's plan to fully liberalize the energy sector, a move Paulwell claimed would facilitate the entry of more electricity providers and which would also result in a reduction in energy costs.

  Southern Copper Q2 profit dawn by 14pct

Southern Copper Q2 net profit fell 14.4% to USD 564 million from the same period a year ago as global metals prices retreated. It said that revenue declined 7.9% to USD 1.66 billion even as production rose 10% to 160,595 tonnes. The company, a top producer of the red metal, said output at its Cuajone mine in Peru rose 31% while production at the La Caridad mine in Mexico rose 18%. Mr German Larrea chairman of Southern Copper said , "Looking beyond the current volatile markets, the medium to long term outlook remains positive for metals, as strong demand growth from China and the emerging economies is poised to continue." Mr German Larrea said ,"The quality of our assets and expansion plans combined with our positive long term view of copper prices gives us confidence in the sustainable cash generating ability of our business.”

China refined H2 copper consumption seen picking up

China's refined copper consumption is forecast to rise by about 5% in the H2 of 2012 from a year ago led by higher demand from power cable makers as the government takes steps to boost the economy. Stronger demand in the world's top copper consumer should trim stocks held in bonded warehouses in Shanghai, which are estimated to stand near 1 year highs and prompt importers to step up purchases of spot copper in the fourth quarter. Chinese demand is a key driver for London Metal Exchange copper prices, with the benchmark three month contract up a marginal 0.75% so far this year. Chinese state backed research firm Antaike expects consumption of refined copper to be 3.95 million tonnes in the H2 up from 3.75 million tonnes in the H1 and taking 2012 consumption to 7.7 million tonnes up 5% from last year.
Mr Yang Changhua senior analyst of Antaike said , "Consumption from the power sector would improve as early as in September. The power sector is estimated to account for near half of China's real consumption of refined copper.” In a research report this week, Goldman Sachs also predicted 5 percent growth in China's copper demand for 2012. China produced 18.064 million km of power cables in the H1 up 13.7% from a year ago. But the pace was slower than the 41.8% rise in the H1 of 2011 as tighter Chinese monetary policy restricted investments.
Beijing has stepped up policies to boost domestic demand as economic growth slowed to its slowest pace in three years in the Q2 and has forecast growth will accelerate in the H2 as policies rolled out to boost economic activity gain traction. A sales manager at a large copper smelter said that large power cables manufacturers expect to get big orders from state power operators in late August or September. Domestic demand for copper has been lower than many importers had expected this year due to cooling economic growth.
Traders said however that importers had not defaulted on term shipments so far because they were storing delivered copper in bonded warehouses and using it as collateral for loans. The loans were mostly in US dollars and provided by foreign banks for six months to one year. Chinese merchants and investors had used bonded copper as collateral for over a year and more used such financing for term shipments in the first half to avoid defaults.
A trader at an international trading house said that two to three foreign banks dominated the stocks financing in the previous year. Now seven to eight foreign banks are in the market. But Chinese firms importing copper specifically as a financing tool have reduced purchases and cut demand for the loans after rates in the domestic market fell last month.

  Copper market in 384000 tonnes deficit Jan-April 2012

The global market for refined copper was in a 384,000 tonne deficit from January to April 2012 up sharply from a 26,000 tonne deficit during the same period of 2011. The International Copper Study Group said that world refined usage stood at 6.948 million tonnes for the first 4 months of the year while production reached 6.564 million tonnes. The ICSG data showed that for the month of April, the market for refined copper was in a deficit of 104,000 tonnes down from 134,000 tonne deficit in March.

  Noranda Aluminum profit beats Street on higher shipments

Noranda Aluminum Holding Company reported Q2 results that beat analysts' estimates as higher shipments of aluminum and flat-rolled products offset lower prices. Aluminum prices on the London Metal Exchange dropped about 20% in the Q2 due to high inventories, prompting Wall Street analysts to lower their original profit estimates on companies such as Alcoa Inc and Noranda. Q2 net profit fell to USD 25.3 million or 36 cents per share down from USD 47.4 million or 69 cents a share, a year ago. Excluding items the company earned 11 cents. Q2 revenue fell 12% to USD 371.7 million but rose 5% from the Q1 on higher shipments. Analysts on average had expected Q2 profit of 9 cents a share on revenue of USD 355.21 million. Noranda operates a mine in Jamaica that produces bauxite which is then refined into alumina at its Gramercy, Louisiana plant. The alumina is then smelted into aluminum at its smelter near New Madrid, Missouri.

  Baotou plans to start rare earths trading exchange

China's Baotou Steel Rare Earth Hi Tech will join six other firms to invest a total of CNY 70 million to start a rare earths trading platform in early August. Baotou Rare Earth said that each shareholder will invest CNY 10 million and hold around 14.29% stake in the company. The exchange will help to establish a unified physical trading platform allowing more transparency in prices. China is the world's top rare earth producer and accounts for more than 95 percent of the global output. The exchange will help the country exert more control over the pricing of 17 strategically important rare earth metals on the global market. Currently, prices in China are published by several independent consultancies and most of the metals have fallen over the past few months due to weaker demand. The exchange will be located in Baotou city in China's Inner Mongolia region, home to nearly half of the world's light rare earths production.

  African Eagle announces disposal of Zambian copper assets

African Eagle Resources Plc announced that it has executed a binding agreement with Elephant Copper Limited for the disposal of its remaining Zambian copper assets, the wholly owned Katanga Resources Limited and its 49.9% interest in Kujima Mining and Exploration Limited which is conditional, amongst other things on approval of the Zambian Minister of Lands.
Both companies hold prospecting licences at varying stages of exploration and Katanga also owns 49% of Mkushi Copper Joint Ventures Limited a JV with Ratel Group Limited that holds a mining licence at the Mkushi Copper Mine. The total consideration of the transaction will be 15 million shares in Elephant Copper and 2% Net Smelter Return on the Katanga assets, which will be applicable once the assets reach production. The book value of the assets, as at December 31st 2011, was GBP 4.2 million but this is subject to re valuation for the Company's upcoming interim accounts.
The transaction is expected to complete within three months. The structure of the deal allows the Company to potentially enjoy future upside from the copper assets, as these are further developed, whilst enabling the Company to focus fully on the development of the flagship Dutwa Nickel Project. Mr Trevor Moss CEO of African Eagle said, "I am pleased to announce the disposal of our Zambian copper assets to Elephant Copper, which concludes the divestment of our non-core exploration assets. This will now enable the management team to focus fully on the development of our flagship asset, the Dutwa Nickel Project.”

  BALCO heads for a land hurdle in Chhattisgarh

Bharat Aluminium Company Limited is heading for a fresh trouble as a complain petition has been filed in the court seeking investigation into the land given to it by the Chhattisgarh government allegedly at a throw away price. The complain petition under section 156(3) of the Criminal Procedure Code read with section 200 has been filed in the court of First Class Magistrate B P Varma here in Raipur district court. The petition has been filed by former minister and senior Congress leader Mr Bhupesh Baghel. Baghel's lawyer G M Ahluwalia said, “In the complaint, we have sought to register an offence against chief minister Mr Raman Singh the then chief secretary Mr P Joy Oommen and CEO of Balco Gunjan Gupta besides probing the land deal that has caused huge loss to the state exchequer.”
Mr Ahluwalia said that the matter is related to regularizing the land that Balco had allegedly encroached for its aluminium facility located in Korba district. The state government had given away the land to the company at premium of just INR 200 and lease rate of INR 20 per acre. The land price remained the same when Balco was given land for the plant way back in 1968. Baghel said that they had earlier submitted a memorandum to the Governor, Mr Shekhar Dutt requesting to sanction prosecution of Chief Minister Mr Raman Singh then chief secretary Mr P Joy Oommen and officials concerned of revenue department.
According to the petitioner, on the initiative of Balco for an out of court settlement of the case pertaining to encroaching about 1200 acres of government land, the chief minister and the then chief secretary took the initiative to present the case before the state cabinet. In one single day on April 27th 2010, the related files were cleared from eight departments. In the complaint, Baghel underlined that the land was regularized and allotted to Balco for INR 200 per acre the rate that existed in 1968. In the deal, the state had to bear a huge revenue loss of more than INR 200 crore.

  Kazakhmys H1 copper output falls 11pct on maintenance

Kazakhmys Plc H1 output of the finished metal dropped by 11% as maintenance halted its Balkhash smelter and the grades of metal it delivered declined. Output in the H1 slid to 136,100 tonnes from 153,000 tonnes a year earlier. Q2 production rose 9% to 71,000 tonnes from the previous three months when adverse weather also hit output. The decrease reflects the lower volume of copper in concentrate produced and the planned repairs to the Balkhash smelter during March and April 2012. Copper output was 10% ahead of the estimate from Nomura Holdings Inc. and 17% better than the forecast at Liberum Capital Limited. Kazakhmys rose 1.8% to 675 pence by 11:26 in London trading, paring its loss for the year to 27%. Kazakhmys, seeking to boost output by about two thirds to 500,000 tonnes a year by opening two mines plans to start production at its Bozshakol project in 2015 and Aktogay in 2016. The company also began extracting ore from its Konyrat mine shut in 2008 because of lower metal grades.
Mr Paul Cliff and Mr Biraj Borkhataria analysts at ING Groep NV said , “As the low grade Konyrat mine is ramped up, there will be pressure on cash costs. We forecast Kazakhmys's cash generation ability to fall dramatically with net cash cost plus maintenance CAPEX rising by 60% per pound of production over 2011 to 2013.” Mr Oleg Novachuk CEO of Kazakhmys said, “Following the severe weather at the start of the year, we are continuing to raise our output and we remain on track to meet our production targets. The company will process the stockpiled ore and copper in concentrate in the H2 assisted by improved availability of equipment.”

  Natixis sees copper prices averaging USD 8250 tonnes this year

Copper prices will climb this year to average USD 8,250 per tonne on consumption in China and supply constraints. Natixis Commodity Markets Limited said that while the estimate is below its May forecast of USD 8,800, it's above the metal's average of about USD 8,018 so far in 2012. Aluminum and lead will average USD 2,000 per tonne in 2012, nickel USD 17,250 per tonne and zinc USD 1,950 per tonne. Natixis said that among the base metals, copper continues to exhibit the strongest fundamentals. Despite the weak global economy, restocking in China is driving a strong increase in apparent demand. If underlying economic conditions begin to improve, a significant rally in copper prices remains a distinct possibility.

  Aura Minerals announces positive preliminary economic assessment

Aura Minerals Inc announced that it has received the results of the preliminary economic assessment study on a mine and mill expansion at its wholly owned Aranzazu copper project in Zacatecas State, Mexico. The PEA, prepared by AMC Mining Consultants, evaluates a feed rate expansion from the current 2,600 tonnes per day to 4,000 tonne per day and 5,600 tonne per day culminating a positive economic assessment to enable the Company to take the Project forward. The PEA is preliminary in nature. It includes Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Mr Jim Bannantine president and CEO of Aura Minerals said, "The results of the Preliminary Economic Assessment is an important milestone for the Aranzazu Project as it outlines the solution to two key issues limiting the Project's current performance: undersized mine and plant capacity and the current arsenic grades in our concentrate. The PEA confirms that the Project's value is greatly improved by expanding the plant capacity to 4,000 tonne per day and installing a roaster to eliminate the high levels of arsenic in our product. The roaster with an approximate cost of USD 22 million and a two year installation and commissioning period is believed to be our most effective solution to decrease arsenic levels. We expect these investments will require 2.5 years to complete thus enabling achievement of the expanded throughput levels by January 2015. The 4,000 tonne per day case features minimal investment in plant capital that would have a very short useful life in the case of a larger expansion. A larger expansion beyond 5,600 tonne per day would require longer term activities such as additional exploration drilling new land acquisition for a potential new plant site, new environmental permits and significantly more capital expenditure. Based on the positive results of the PEA, the next step is to commence the feasibility study and advance engineering for the expanded Aranzazu Project.”

  Lower metal prices dent Boliden Q2 profit

Sweden's Boliden posted lower than expected Q2 earnings as weaker metals prices hit profitability at both its mining and smelting business, eclipsing a firm rise in sales volumes. Boliden's pretax earnings fell to SEK 714 million from 1.08 billion a year earlier to come in below the mean forecast of 923 million seen in a Reuters poll of 8 analysts. The company, among the world's ten biggest zinc producers and top copper producer in Europe said that while production rose at its mines and smelters and currency swings worked in its favor lower metal prices and rising costs weighed heavier. The quarter was characterized by a relatively high production, especially in Mines but also by lower metal prices. The company said that we have not seen any major changes among our industrial customers mainly located in Northern Europe. Boliden's sales remain strong but we share the market's concerns regarding the future development.

  Chinese near term copper demand may rise

A revival of Chinese copper demand in the H2 of 2012 is expected to help boost the global market when the outlook for European demand is less promising due to the euro zone crisis. Aurubis said that London Metal Exchange copper prices have generally been range bound between USD 7,500 per tonne and USD 7,700 per tonne in the last month without indicating a clear direction. Three month LME copper on the London Metal Exchange was at USD 7,655 per tonne by 1103 GMT after touching 2 week high of USD 7,813. It said that there is talk on the copper market that the second half of 2012 could develop better than the first. The primary reason for this assumption is the expectation of higher copper demand in China based first and foremost on the Chinese government's economic support measures, which could be reflected in better copper demand.
Two of the most important copper demand drivers in China are continued urbanization and measures to improve the energy supply and energy efficiency. Momentum for the recovery of demand is also expected from additional infrastructure projects, the automotive sector and the energy cable sector. Southern Europe in particular is influenced by the euro crisis. While demand on the European spot market has been revived recently and the premiums have therefore climbed above the levels of the annual contracts, this is most likely due to delayed shipments and extremely low copper inventories of about 13,500 tonnes in the European LME warehouses.

  Nalco may lose INR 300 crore due to 5pct idle capacity

Nalco is likely to take INR 300 crore hit on annual revenue as it is forced to keep 5% of production capacity idle due to lower metal price and shortage of coal. A company source said that we kept idle 10% of our total 460,000 smelting capacity due to inadequate coal supply since last November. Subsequently, half of that was restored in May and the rest 5% is still idle. This is likely to impact INR 300 crore to our annual revenue.
The primary reason for keeping the 5% capacity idle is subdued international price of the metal, which is now hovering at around USD 1,800 per tonne to USD 1,850 per tonne. Inadequate supply of coal from domestic sources is also responsible for the plant running at lower than the installed capacity. Nalco had clocked revenue of INR 6,611.57 in 2011 to 2012. Had there been a good price of the metal in the global markets we could have run the full capacity, even on imported coal. But since the current London Metal Exchange price does not support production on imported coal, it is not economical to run the full capacity.
The source said that Nalco would have incurred INR 40 crore loss in the current fiscal if it would operate the five per cent idle capacity on imported coal. The price of aluminium on the LME is low. It has remained subdued so far in this fiscal due to poor demand from all the user sectors like transport, packaging and construction, which account for nearly 70% of the global 42 million tonne consumption of the metal. Condensed margins have forced a lot of global aluminium capacity to be put on hold as the price of the metal is on the wane while the raw material costs are on the rise.
However Nalco could have managed to run in its full capacity provided it had received the entire coal requirement domestically. Nalco requires around 18,000 tonnes coal per day to run its plant on 100% capacity.

  June daily aluminium output drops to 67700 tonnes

According to figures from the International Aluminium Institute, daily average primary aluminium output in June dropped to 67,700 tonnes compared with 67,900 in May and 70,000 in June 2011. IAI said that total production in June was 2.030 million tonnes compared with a revised 2.106 million tonnes in May and 2.099 million tonnes in June 2011. Including China, June's average output was 123.8 million tonnes up from a revised figure of 122.1 million tonnes in May. In China, total primary aluminium production in June rose to 1.684 million tonnes from 1.678 in the previous month.