Jiangxi Copper Posts Fourth-Quarter Profit on Higher Prices

March 30 (Bloomberg) -- Jiangxi Copper Co., China's biggest producer of the metal, swung to a fourth-quarter profit from a year ago after prices rose amid the global economic recovery.

Net income was 623 million yuan ($91.3 million) for the three months ended Dec. 31, compared with a loss of 1.4 billion yuan a year ago, according to figures derived from the company's full-year statement to the Hong Kong stock exchange today. The profit trailed the 840 million yuan mean estimate compiled by Bloomberg from 11 analysts.

Copper prices jumped 76 percent in the fourth quarter as China's 4 trillion yuan stimulus spending boosted manufacturing growth. Chinese demand for the metal is weak now because of lackluster consumption from the power industry, Tongling Nonferrous Metals Group Co. said March 5.

"Copper demand growth may slow down," Owen Liang, analyst at Guotai Junan Securities Co., said by phone from Shenzhen before the announcement. "Investors are concerned about a monetary tightening, which will damp metals prices," said Liang, who has an "accumulate" rating on Jiangxi Copper.

Jiangxi Copper rose 3.8 percent to close at HK$17.56 in Hong Kong today. In Shanghai trading, the stock rose 1.4 percent.

Full-year net income rose to 2.38 billion yuan, or 0.73 yuan a share, from 2.29 billion yuan, or 0.76 yuan, a year earlier, the company said today. The earnings were compiled under international accounting standards. The profit trailed the 2.6 billion yuan mean profit estimate compiled by Bloomberg from 11 analysts.

Sales dropped 4.2 percent to 51.4 billion yuan, the company said.

Refined Copper

Jiangxi Copper boosted production of refined copper by 14 percent in 2009 to benefit from a 60 percent increase in copper processing fees. The fees, known as TC/RC, declined 38 percent this year as smelters compete for ore supplies.

"The demand is not very strong in the first place," Jiangxi Copper Chairman Li Yihuang said in Beijing in March while attending the National People's Congress. "But a lot of people have long positions in the market, so I think in the first half of this year, copper prices will be good."

A long position is a bet that prices will rise.

Jiangxi Copper may boost its self-sufficiency in ore to 26 percent by 2011 through expanding production at Dexing mine and Chengmenshan mine, according to Sarah Wang, a Shanghai-based analyst at Masterlink Securities Investment Advisory Co.

The company has copper resources totaling 16 million tons, including projects in Afghanistan and Peru, Chairman Li said in March. Jiangxi Copper is in talks to acquire Yantai Penghui Copper Industry in Shandong province, Li said.

Yantai Penghui produces 120,000 tons of refined copper a year.