Kolkata: State-owned Hindustan Copper Ltd (HCL) on Wednesday announced it had reopened the Kendadih mine in Jharkhand—the first of two mothballed mines it is reviving—creating at least 1,000 new jobs.
The Kendadih mine was abandoned 17 years ago after it became financially unviable. Following Wednesday’s announcement, HCL’s shares jumped 3.93% on BSE to Rs92.65 apiece in a weak market. The government owns 76% stake in the company after a recent sale of 6.8% of the company’s shares.
Going forward, HCL is looking to reopen the Rakha mine, which, too, is in Jharkhand. The two mines together could potentially create up to 3,000 new jobs, according to Santosh Sharma, HCL’s chairman-cum-managing director.
When operations at these mines were suspended in 2000-2001, the company had laid off some 1,500 workers after giving them a severance package.
Infrastructure at these mines was poor and they would often get flooded, said Sharma. The key to reopening the Kendadih mine was a thorough upgrade of mining infrastructure, he added.
Though Sharma wouldn’t commit to a timeframe, he said he was hopeful that the Rakha mine would be reopened within the current financial year.
The Kendadih mine is expected to yield at least 225,000 tonnes of ore a year. The Rakha mine, which is much bigger, has the potential to produce 1.5 million tonnes (mt) a year. HCL is also developing an adjoining mine—Chapri-Sideshwar, which, too, is estimated to yield 1.5 mt a year.
The high cost of underground mining at HCL was one of the key reasons for closing these mines, said another official, who asked not to be identified. When copper prices on the London Metal Exchange (LME) fell to Rs1,700-1,800 a tonne in the early 2000s, the underground mines became unviable because it was cheaper to import the metal, this person said.
Copper prices on LME have now shot up to Rs6,500-7,000 per tonne, and shoring up production by reopening the abandoned mines would only strengthen the company, he added.
Under a five-year programme, HCL is looking to shore up annual production from 3.4 mt to 12.4 mt at an estimated cost of Rs5,000 crore. Under this plan, the company is developing underground mines from existing open cast mines at Malanjkhand in Madhya Pradesh. On completion, the mine’s annual production capacity is expected to go up to 5.2 mt from 2 mt a year.
HCL, which has mining operations in Jharkhand, Madhya Pradesh and Rajasthan, clocked a revenue of Rs1,216.94 crore in fiscal year 2016-17, up from Rs1,068.95 crore in the previous year. Its net profit in the year was at Rs61.94 crore compared with Rs37.74 crore in the previous year.