SHANGHAI, Sept. 13 (SMM) -- According to the semi-annual report of Huludao Zinc Industry Company, a subsidiary of China Metallurgical Group Corporation (MCC), the company realized operating revenues of RMB 3.17 billion from January to June 2010, up 61.39% compared with RMB 1.96 billion in the same period of 2009.
Huludao Zinc Industry Company has no internally-produced zinc concentrate, so raw material costs have had a significant effect on company profits. SMM believes improvements in company operating revenue during 1H 2010 were due to the following two reasons:
First, the company's technical innovations help reduce costs and increase profits.
According to recent company news, the power operations area of the maintenance workshop at the refined zinc smelter successfully completed electrical upgrades to the discharge system of the distilling furnace. The system can now not only meet production needs but also significantly reduce maintenance costs.
Second, MCC helps Huludao Zinc Industry Company minimize purchasing costs.
MCC helped Huludao Zinc Industry Company improve operations through collaborative purchasing transactions. Huludao Zinc Industry Company primarily sourced its zinc concentrate from MCC International Economic and Trade Company during 1H 2010, helping Huludao cut purchasing costs, ensure raw material supply, and minimize pricing risks. However, the price spread between zinc ingot and zinc concentrate narrowed in 2Q due to steady declines in zinc prices, and causing significant declines in profits at Huludao. SMM believes if MCC continues to help Huludao Zinc Industry Company maintain a healthy price spread between zinc ingot and zinc concentrate by keeping purchasing costs low, profits at Huludao Zinc should improve in 2H 2010.
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