The global slowdown coupled with a drop in China’s copper demand has claimed yet another victim.
This time it is a copper mine operated in Australia by Aditya Birla Minerals, part of India’s Aditya Birla Group.
The company issued a statement here late last week saying it had decided to place its Mt. Gordon operation in Queensland under “care and maintenance” by the end of April, and then would await the outcome of a study on whether to expand and lower the operating costs of the mine.
The decision to shut the smaller of its two Australian copper mines till further notice was because it was struggling to make profits at current copper prices.
A report by Reuters stated that Mt. Gordon produced the red metal at an annual rate of 20,000 tons of copper in concentrate form which was supplied to a copper smelter in India owned by another Aditya Birla subsidiary, Hindalco Industries.
It’s no secret that the average copper price has been below the US $8,000 per ton mark for a while. Prices remained largely subdued in 2011, then swung between gains and losses in 2012. For this year, sector analysts have predicted a better short-term future for copper, which could be tempered by a fall in the latter half. The European debt crisis, plus the deceleration in growth in the US and China, were the other reasons for copper’s lackluster performance. On India’s Multi Commodities Exchange (MCX), copper prices have by and large reflected the larger global sentiments.
This is not the first time they’ve decided to halt production at Mt. Gordon. When operations were re-started in January 2011, the copper price on the London Metals Exchange was about $9,600 per ton. Today, it hovers around $7,700.
The company said there were uncertainties still prevailing in regards to economic conditions in Europe, as well as the Chinese housing market. At current production rates, the unit operating cost per pound of copper produced at Mt. Gordon had become “unacceptably high, adversely impacting the profitability of the operations.”
The company had conducted a scoping study in February this year and found that there was an opportunity to transform Mt. Gordon into a high-production operation with lower per unit operating cost by converting the present open stope trucking haulage method in to a sub-level caving hoist shaft haulage method.
So all may not be lost for the mine yet.
Sohrab Darabshaw contributes an Indian perspective to MetalMiner.