SHANGHAI, Aug. 12 (SMM) – China Molybdenum Co.’s net profit grew 66.13% in the first six months, due mainly to contribution from Northparkes mine and cost control efforts, according to the company’s interim report.
Although prices for China Molybdenum’s major products – molybdenum, tungsten, and copper – dropped during the first six months, the company made a profit of 1.01 billion yuan ($163.24 million), or 0.198 yuan per share, in the first half of the year.
Australia’s Northparkes copper-gold mine acquired by China Molybdenum’s in December 2013 were running smoothly this year, and contributed $62.1 million to the company’s net profit.
Its cost control efforts also helped improve profitability. The company’s cash costs for molybdenum concentrate and tungsten concentrate production in H1 were 16% and 8% lower than the full-year budget.
Moreover, the company benefitted from equity transfer, as it gained 281.59 million yuan for selling stake in its subsidiary Luoyang Kunyu Mining Co. to Zijin Mining Group Co.
The company expects molybdenum demand from stainless steel sector to grow by about 10% in the latter half of the year given continuous transformation in steel industry. On the supply side, China’s tighter environmental protection inspection will shut down some small and medium smelters, causing a decline in molybdenum oxide and ferromolybdenum output. The resultant supply shortage is expected to push up ferromolybdenum prices. However, molybdenum concentrate prices may decline on increasing supply.
With respect to molybdenum market overseas, the company believes the recovery will be mild in the third quarter after foreign companies start summer break, but shows optimism over the market in the fourth quarter.
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