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Aurubis records flat profits as product earnings decline

Keywords: Tags  Aurubis, copper concentrates, copper scrap, product sales

LONDON — Hamburg, Germany-based copper producer Aurubis AG posted flat net income in its fiscal-year 2012, as stronger treatment and refining charges and recycling throughput offset an 80-percent decline in product earnings, the company said Thursday.

Consolidated net income was €207 million ($270.6 million) in the 12 months ended Sept. 30, down 2 percent year over year, as stronger revenues from concentrates and scrap processing offset an 80-percent drop in earnings from the products business. The products unit contributed €10.1 million ($13.2 million) to total operating earnings before tax of €296 million ($387 million).

The copper smelter produced 1.147 million tonnes of cathode across its primary and secondary units, unchanged from output in the 2010-11 period.

Wire rod and cast shapes output fell 18 percent and 17 percent, respectively, while flat-rolled product volumes were 1 percent lower, responding to a progressive decline in downstream demand throughout the year.

“European markets for copper products were negatively influenced by the growing economic uncertainty in the eurozone and a weak economic trend in important export markets during the course of the fiscal year,” Aurubis told investors Thursday.

“Our customers were more cautious in their purchases and demanded higher delivery flexibility. The initial optimism in the German semis industry was put into perspective as 2012 went on, as end customers worked below capacity in some cases,” the company said.

Aurubis expects the copper products market to stabilize at the lower levels it has seen this year, while competition for business may intensify, executive board member Stefan Boel told AMM sister publication Metal Bulletin earlier this month (, Dec. 6).

The weaker performance in products markets was offset almost completely by higher earnings from primary and secondary production, as treatment and refining charges improved and competition for scrap moderated.

The company saw a strong improvement in concentrates supply toward the end of the year, after mine strikes initially crimped supply.
While spot treatment and refining charges rallied from severely depressed levels, Aurubis only bought a “low number” of concentrates on the better spot terms, as it was well supplied under annual contracts, the company said.

Benchmark treatment and refining charges were set by Freeport-McMoRan Copper & Gold Inc. at $63.50 per tonne/6.35 cents per pound for 2012, while in the spot market, terms increased from about $20 per tonne/2 cents per pound to $80 per tonne/8 cents per pound in the 12 months ending Sept. 30.

The company has said it is targeting a benchmark of $80 per tonne/8 cents per pound for 2013, while Freeport is rumored to view $70 per tonne/7 cents per pound as acceptable.

“Overall, we expect positive conditions for Aurubis on the copper concentrate markets with a global increase in the treatment charge level,” Aurubis said Thursday, although it added that production will be affected by a maintenance outage at the Hamburg smelter scheduled for September of next year.

While average copper prices dropped to $7,844 per tonne—down 14 percent in dollar terms—this slide was mitigated by a strengthening of the euro throughout the year, Aurubis added.

It expects “high but volatile” copper prices in 2013; as a result, it also foresees continued strength in the availability of copper scrap.
“We can benefit from this market in the future due to the technical possibilities in the use of complex materials, and we expect full utilization of these smelting capacities,” Aurubis said.

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