SHANGHAI, Aug. 30 (SMM) –The Semi-annual Report of Yunnan Copper (Group) Co., Ltd. (000878) (hereinafter referred to as Yunnan Copper Group) showed the operating revenue reached RMB 16,612,891,339.69 during the report period, up 21.35% from the same period last year, and net profits were RMB 671,563,562.42, an increase of 128.64% compared with that of last year.
The increase in net profits was due mainly to a rise of USD 2,249/mt versus the same period last year in closing prices for LME copper prices, which averaged at USD 9,408/mt in three months. The average SHFE copper prices (including tax) were RMB 70,125/mt in three months, up RMB 12,418/mt than that of the previous year. Increases in base metal prices helped gross profit margin of major products rise compared to the same period last year, and in particular, gross profit margin of electrode copper increased 9.00% over the same period last year. Gold and silver prices set new record highs within the year, so gross profit margin for precious metals surged 66.09% than that of last year.
SMM believes although Yunnan Copper Group posted strong net profits in the first half of 2011, the situation of “bigger profit margins for mine owners, small profit margins for smelters” in the nonferrous metal industry will remain unchanged.
Based on the report, Yunnan Copper Group realized a refined copper capacity of 175.3 kt during the report period, and copper produced from its self-owned mines were 29,532 mt (metal content). The self-sufficiency of copper mines was 16.8% in Yunnan Copper Group, and was 73% in Western Mining, resulting in a sharp comparison in gross profit margin between the two Groups. Gross profit margin of copper products in Western Mining was 28.8% in the first half, while gross profit margin for refined copper in Yunnan Copper Group was only 6.29%, despite an increase from the same period last year. Therefore, SMM holds the view that future development of copper smelters will depend on resource control.