Don't Count Hindustan Copper Out?

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Continued from Part One.

On the other side of the world, manufacturing activity seemed to have picked up in China and India, too. Chinese officials have been today's copper prices - MetalMiner IndXquoted in various news reports saying its manufacturing sector had expanded last month, which had also pushed copper prices higher. China is one of the largest importers of copper.

Coming back to HCL for a moment: the Malanjkhand underground project is a key component of this growth strategy. Post-expansion, the mine’s capacity would be 5.2 million tons against 2 million tons now. The company has eight other projects in hand including the re-opening of some of its other mines, which had been previously shut down due to becoming non-viable. All this would bring HCL’s mining capacity to 12.4 million tons by 2016-17.

Those with narrow vision may question HCL’s move to the ore business. For now, in the short-term, India is content being a net exporter of copper after being a net importer during the last decade.

But HCL, which is India’s only vertically integrated company with coal mines, and capabilities for smelting, refining and casting of copper, could be on the right path for the long term, since so far, India has never been a major producer of copper ore but only of its refined forms.

If the economic slowdown had not happened, India’s copper consumption would have registered growth in 2012. Conditions, though, never remain stagnant. In the long term, there’s no denying the fact that copper will become a huge commodity for India, because of its growing economic status.

today's metal prices - MetalMiner IndXAround 200 power projects are likely to come up in the next five years, and these will eat up a lot of Indian-produced copper. And that is precisely when copper ore could become vital business for companies like HCL. Even if consumption internally does not take the trajectory that’s been predicted, ore can always be exported, as is being done today.

So, HCL most probably will find itself in a win-win situation.

Sohrab Darabshaw contributes an Indian perspective to MetalMiner.

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