Aditya Birla Puts Australia Copper Mine In Cold Storage

The global slowdown coupled with a drop in China’s copper demand has claimed yet another victim: a copper mine operated in Australia by Aditya Birla Minerals (ABY.AX), part of India’s Aditya Birla Group.

The company issued a statement 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 will await the outcome of a study whether to expand and lower the operating costs of the mine.

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.”

A report by Reuters stated that Mt. Gordon produced the red metal at an annual rate of 20,000 in concentrate form which was supplied to a copper smelter in India owned by another Aditya Birla subsidiary, Hindalco Industries.

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 larger global sentiments.

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.

by Sohrab Darabshaw