Zambia: KCM records $309M year profit

By Nawa Mutumweno – Konkola Copper Mines (KCM) has recorded about $309 million operating profit for the year ended March 31, 2011.

Information obtained from the owner of the mining firm, Vedanta Resources of India, says during the same period last year, the mining giant recorded $32 million. Earnings Before Interest, Taxes, Depreciation and Armotization (EBITDA) for the year ended March 31, 2011 stood at $440 million.

The preliminary financial results show that the EBITDA for KCM rose from $151.8 million for the year ended March 31, 2010 to $439.9 million during the just-ended year.

This rise has been attributed mainly to increased production and higher average copper prices at the London Metal Exchange (LME).

“The operating profit for the financial year was $309 million up from $32.5 million the previous year because of the increase in EBITDA, partially offset by higher armotisation and depreciation on the new Nchanga smelter,” the statement says.

And Vedanta has posted a 29% rise in full-year earnings per share on the backdrop of robust commodity demand and splendid output.

According to Vedanta chairperson Anil Argarwal, the group posted a 28% rise in attributable profit to $770.8 million, on the back of a 44.1% rise in revenues to $11.4 billion.

“Against a background of robust demand for commodities, we have delivered an exceptional financial performance, achieving record levels of production and record sales,” Mr Agarwal pointed out.

The group said it saw continued growth in demand for key metals from India and China, with tight supply in copper and zinc.

EBITDA for the company, which apart from Zambia where it operates in Chingola, Chililabombwe and Nampundwe, Vedanta has operations in India and Australia, went up over 55% to $3.6 billion.

Vedanta’s earnings currently depend largely on iron ore, copper and zinc, but the group has pursued a strategy of diversification and could get as much as a quarter of its profits from oil and gas in three years, if it succeeds in its bid to acquire Cairn India.

“Strengthening prices, increased volumes and a continued strong focus on operational efficiency contributed to a substantial growth in revenues to $11.4 billion, up 44% on last year, and in a record EBITDA of $3.6 billion.”

Meanwhile, KCM is in June scheduled to resuscitate its listing in London which was suspended last December.

KCM which plans to raise $1.1 billion from its initial public offer (IPO) had shelved plans to list on the London Stock Exchange due to volatility in the market.

Using a vehicle called Konkola Resources, KCM plans to dual-list on the London Stock Exchange and Lusaka Stock Exchange (LuSE), with the initial listing earmarked for the British-based bourse.

“The listing is likely to take place this June.  There is enough serenity in the market now and the fundamentals appear very strong,” sources close to the transaction have revealed.

And Mr Agarwal has said KCM needs to speed up the development of the Konkola Deep Mining Project (KDMP) to meet production targets.

KCM said in November last year that it is targeting 400 000 tonnes of copper cathode per annum by March 2014. The company’s output for the last fiscal year was 217 000 tonnes.