Last Updated : 28 July 2009 at 06:10 IST

Copper miners in troubled waters

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By Geena Paul
JHANNESBURG (Commodity Online): Even as gold miners are reaping rich dividend due to the rising prices of the yellow metal, copper producers are faced with a lot of hardships across the globe.

At a time when companies are coming out with their first half results, there are several copper miners who came out with a huge drop in their profits.

For example, Southern Copper Corp, the largest copper producer in Peru and Mexico, posted a 68 per cent decline in second-quarter profit on slumping metals prices.

Net income fell to $175 million, or 21 cents a share, from $548.5 million, or 62 cents a share, a year earlier, Phoenix- based Southern Copper said.

Southern halted all investment projects in the first quarter on slumping prices. Copper prices have plunged 45 per cent in the past year, while zinc is down 30 per cent and silver has slid 20 percent. Quarterly net sales fell 43.6 percent to $824.5 million.
Copper output in the second quarter rose 1.7 per cent to 119,278 tonnes and molybdenum gained 12.6 per cent. Zinc production climbed 0.3 per cent and silver added 9 per cent.

Southern, 75 per cent owned by Grupo Mexico SAB, will resume construction at its Tia Maria and Toquepala mines in Peru after prices rebounded this year.

World’s biggest copper mine in Chile is shutting a key milling operation for 45 days for repairs after equipment problems contributed to a 38% decline in mine production of 2008 for 57.5% owner BHP Billiton.

BHP Billiton said the shutdown in the current quarter would replace coils on one of two semi autonomous grinding mills required to crush ore.

Rio Tinto last week said that its share of mined copper from its 30% stake in Escondida fell 41% to 76,200 tonnes in the last quarter.

BHP Billiton reported an overall 12% decline in copper production to 1.207 million tonnes in 2008/09, with lower ore grades at some mines also contributing to the decline.

It said that partially offsetting the drop was rising output from leaching operations to make cathodes at Escondida and at the Spence mine, also in Chile and better performance from the Olympic Dam smelter in Australia.

So, copper has been going through a rough patch and almost all major copper miners are shutting down units or cutting down on production to tide over the crisis.