In keeping with an earlier announcement of expansion of its mining activities, India’s Hindustan Copper (HCL) recently went ahead and signed a preliminary agreement to develop an underground mine in the state of Madhya Pradesh in a region where India’s single-largest copper ore deposit lies.
The Malanjkhand belt is estimated to have about 70 percent of India’s total copper reserves. To exploit this resource, HCL is expected to invest about US $334 million (Rs 18.5 billion) in developing the underground mine there. A Memorandum of Understanding (MoU), the first step in starting a project, was signed between the company and the state government officials.
MetalMiner had reported in September this year on HCL’s new business focus on the production of ore, and its plan of increasing its mining capacity four times. HCL is India’s largest state-owned copper company, and has chalked up ambitious expansion plans, despite copper consumption within India not being at levels as high as, say, China or the United States.
India had a per-capita consumption of 0.5 kg in 2011 against China’s almost 6 percent. In 2012, because of the economy slowdown, it is predicted that India’s annualized copper consumption could end at 4 percent, lower than the more than 6 percent of recent years.
Internationally, copper prices had started falling since August 2011; one reason being the recession in Europe and the US, and the other, China, one of the biggest consumers of copper, too, slowing down its intake of the metal. Copper is one of the barometers of a good economy and any increase in its consumption is taken as a mark of a nation’s growth.
But HCL’s Chairman Shakeel Ahmed, at the time of announcing HCL’s mining expansion plans, had predicted copper prices rising from the last quarter of this year.
There are vague signs of this happening at the moment, and maybe Ahmed may just turn out to be correct in his prediction. Manufacturing activity in three of the world’s largest economies – the US, China and India — has improved in October, going by initial reports coming in. According to the Institute for Supply Management (ISM), this was the second consecutive month of growth, suggesting the sector should continue to expand based on increased consumer spending.
Consumer confidence also jumped in October to its highest level in nearly five years, prompting Americans to spend more on vehicles, other factory produced goods and retail stores.
To be continued in Part Two.