Monday, November 30, 2020
Martin Hennecke
HKEx Stock Code : 01258 
Corporate Profile
The Group is a leading, fast growing and vertically integrated copper producer, focusing on the mining, ore processing, leaching, smelting and sale of copper, based in Zambia.

Business Review - For the year ended December 31, 2012

The Group is a leading, fast growing and vertically integrated copper producer, focusing on the mining, ore processing, leaching, smelting and sales of copper, based in Zambia. The Group also produces sulfuric acid, a by-product generated during the blister copper smelting process.

The businesses of the Group are carried out mainly through its four subsidiaries in Zambia: NFCA, Luanshya, CCS and SML. SML has three joint venture subsidiaries, namely Kakoso Metals Leach Limited (¡§Kakoso Company¡¨) located in Zambia, and Huachin Metals Leach SPRL (¡§Huachin¡¨) and CNMC Huachin Mabende Mining SPRL (¡§CNMC-Mabende¡¨) located in the DRC.

In 2012, blister copper and copper cathode produced by the Group amounted to 175,280 tonnes and 22,315 tonnes respectively, representing increases of 16.2% and 218.7% respectively, over the same period in the previous year; and the sulfuric acid generated increased by 28.7% over the same period in the previous year to 423,494 tonnes. These production growths have spurred a growth of 19.3% in revenue of the Group from US$1,283.9 million in 2011 to US$1,532.3 million in 2012.

Business Outlook - For the year ended December 31, 2012

In adherence to expanding exploration and development, the Group continued to increase copper and cobalt reserves and resources. Meanwhile, the Group enhanced the capacities in mining and processing businesses as well as in copper leaching and smelting operations. The Group will continue its focus on research and development along the copper production chain, especially in the areas of separation of copper and cobalt and bioleaching technology.

Investment in exploration and development will be further increased. We will push ahead with the construction of the Chambishi Southeast Mine, actively develop new mines including the Mwambashi Mine, pay great attention to and more efforts in expanding the exploration area, as well as exploration in the areas immediately surrounding and in the depth of the existing mines. Meanwhile, the Group will continue to identify suitable acquisition targets in regions with rich copper resources such as the DRC, with an aim to increase the Group's resources.

It is also the Group's aspiration to, through the development of the Muliashi Project, the 20,000-tonne Mabende Project and the phase II of the expansion project of CCS, expand its capacities in copper smelting and leaching operations, increase the proportion of resources generated from its own mines for copper production and ultimately enhance its profitability by tapping into the advantages of vertical integration in operations.

The Group will further improve its management practices, increase investment and stay in strict compliance with relevant laws and regulations in respect of safety and environmental protection. Meanwhile, it will continue with its social responsibilities, maintain a good corporate image, and provide active support to the local economic and social development.

Future Prospects

Looking into 2013, the effect of European debt crisis and the uncertainties in world economic environment will persist. Recovery of U.S. economy has been lackluster, while emerging economies' growths are lower than expected due to their needs for structural adjustments. China has set a lower growth rate for its economy and adopted a moderately tighter monetary policy. All these factors make the economic environment in 2013 more complicated and volatile. As the demand for base metals, particularly copper, has been dampened, a substantial price recovery is unlikely. However, from a long-term perspective, China's urbanization trend is evident. Under the effect of ¡§steady growth¡¨ policy, including pre-tune and fine-tune strategies, China's economy is expected to grow gradually. Copper supply growth rate will not change in the near-term, the long-term outlook of copper price continues to be optimistic.

In 2013, the Group will continue to promote the construction of key projects, and further enlarge our reserve and resources of copper and cobalt, and the production capacity of leaching and smelting operations through exploration and development activities. Meanwhile, we will continue to optimize internal management, intensify cost control and improve operation efficiency, so as to secure its profitability.

1. Continue the construction of key projects

With regard to the Muliashi Project, its agitation leaching system was successfully put into production in the second half of 2012, and the heap leaching system is expected to become operational in the first half of 2013. At the same time, we will further strengthen the operation management of open-pit mines and ensure the stability of ore grade and volume. Being scheduled to be completed in 2013, phase II of the expansion project of CCS will, upon completion, bring the production capacity of the Company's blister copper to a new level. In 2013, the 20,000-tonne Mabende Project will also be a main focus of construction, and development of Chambishi Southeast Mine will be carried out in a faster pace.

2. Improve performance of existing operations

The Group will continue to pay due efforts in its mining activities at Chambishi Main Mine, Chambishi West Mine and Baluba Center Mine, so as to increase the production volume of copper concentrate from its own mines. While boosting the production volume of blister copper and sulfuric acid of CCS as well as the leaching operations, the Group will expedite the validation and verification of the cobalt recovery program, with a view to further increase the existing production capacity and returns.

The Group will further technological innovation and optimize production process. In particular, more efforts will be made in research of bio-metallurgical technology to enhance the processing capacity of low-grade ore. The Group will strengthen cost control and improve management practices to maximize profit. In addition, we will further enhance ability in human resources management and strengthen staff training to provide guarantee for safe and efficient production, while fulfilling corporate social responsibilities.

Source: China Nonferrous (01258) Annual Results Announcement
Chairman Tao Luo Issued Capital (shares) 3,489M
Par Value HKD 1 Market Capitalisation (HKD) 9,420M
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