Copper prices are likely to rise further after pushing above $8,000 a tonne this month, supported by China’s strong economy and government stimulus efforts after the covid-19 pandemic, the head of Hong Kong-listed MMG Ltd said on Friday.
Prices of copper have nearly doubled from last year’s lows and the red metal was one of 2020’s stand out performers.
“We have strong confidence in fundamentals of our core commodities, particularly copper,” chief executive Gao Xiaoyu told a results call. “Momentum will continue particularly in the short term.”
MMG flagged a possible drop in copper production this year due to covid-19 related production delays, and its suspension of output at its Kinsevere mine in September.
It plans to produce 360,000-390,000 tonnes of copper in 2021, having churned out 384,564 tonnes of the red metal in 2020.
Output at MMG’s Las Bambas, one of the world’s top copper mines, may recover to 310,000-330,000 tonnes this year, after falling 19% year to 311,020 tonnes last year, it said.
Road blockades in Peru continued to restrict concentrate shipments, but production has been minimally impacted, MMG said in a filing to the Hong Kong exchange on Thursday.
“Las Bambas copper volumes are expected to recover from 2022 onwards, with average annual production of approximately 400,000 tonnes anticipated over the period 2022 to 2025,” it added.
MMG, majority-owned by China Minmetals Corp, planned to make 240,000-260,000 tonnes of zinc this year, after combined output from its Australian operations reached 245,097 in 2020, down 3% year-on-year.
It is considering a mine extension at its Kinsevere copper operations in the Democratic Republic of Congo, which would add a circuit for battery material cobalt, setting the firm up as a battery metals provider.
MMG needs to reduce its debt-to-equity ratio to 30-40%, from more than 70% currently, before considering paying dividends, Ross Carroll, MMG’s chief financial officer said.
(By Mai Nguyen and Melanie Burton; Editing by Richard Pullin)