What awaits KAZ Minerals
8 April 2015
Copper cost will be a major factor in the success KAZ Minerals. If the price of the red metal in 2015 will continue to decline, the company expected operating losses. What is surprising — Today the cost of smelting of copper higher than its stock value. The results of 2014 do not add optimism. Compared with 2013 year revenues decreased by 9.1%. Net loss amounted to 2.362 billion. USD. If in January 2014 the copper price was 7294,9 USD / ton, the December price has fallen to a mark 6422,9 USD / ton. And the price of copper has decreased to 5815 USD / ton in January.
According to experts this year, the price of copper will be in the range of 2,51−3,21 USD / lb. Average costs 2,9 USD / lb. Thus, the company expects to unpleasant consequences. In line with its own forecasts this year, gross cash cost will amount to 2,8−3 USD / lb at the working sites.
The feasibility study provides cost Bozshakol copper at the level of 6500 USD / ton. Oleg Novachuk expects that the price will rise to the level of 7717 USD / ton by the time Boschekul cord will reach its full production capacity. According to preliminary calculations, by 2017 KAZ Minerals can produce about 205,000 tonnes of copper, 95,000 tons of zinc. In addition to this will be made of silver and gold. If the value of copper in the amount of 2,95 USD / pound revenue of about 1.33 billion. USD. If the price of gold and zinc remain at the same level of income will reach 1.58 billion. USD. If copper has risen in price from the current 2,65 USD / lb, the company's earnings will be about 1.12 billion. USD. Throw in revenue from gold and zinc, we obtain a profit of $ 1.37 billion. USD. In the event that the price will reach the mark of 3,5 USD / lb, the company will be able to earn about 1.12 billion. USD. In view of gold and zinc revenue will rise to 1.83 billion. USD.
Taking into account the revenues and expenses KAZ Minerals, hardly worth expect a positive return at current pricing. However, the minimum income is not excluded in the cost of copper in the values specified in the SOC.
With all the difficult moments, the company plans to be active in addition to the construction of mines and concentrate production. Now KAZ Minerals is considering a project to build copper smelting production in Kazakhstan. This construction is a necessary measure. Balkhash plant will not pull the volume of concentrate from Bozshakol. Zhezkazgan plant also will not be able to work with Bozshakol concentrate, given the content of sulfur at the level of 35−40%.
