Hindalco Industries Ltd’s Australian copper mining arm Aditya Birla Minerals Ltd (ABML) may sell its Mt Gordon project in northern Queensland, sources said.

According to the management, the asset, which was shut in April, was recently put under “strategic review”.

The company has been in preliminary discussions with a couple of potential buyers, sources said.

Sunil Kulwal, MD and CEO, Australian Securities Exchange-listed ABML, had told the company’s shareholders on August 20 that ANZ Bank had been chosen as the financial advisor “to carry out a strategic review of Mt Gordon operations and advise on all strategic options”.

Hindalco’s Gujarat smelter gets its supply of copper concentrates from Perth-based ABML for tolling.

The smelter, the largest location unit, is the Group’s only “captive” source.

High operating costs coupled with a low production rate and falling copper prices have made the mining operation unviable.

According to sources, ABML primarily has two options — change to an operation metric (cave mining method) that is cost effective, or sell the asset.

The first option would require fresh investments. The second would call for a reassessment of the reserve’s valuation.

An earlier study had indicated the possibility of 4 million tonnes a year operations for nine years being cost-effective.

The asset has the “potential” for an extension of mining life to 16 years with maximum production of 49 mt of 1.4 per cent copper grade ore.

ABML’s other Australian copper mine project, Nifty in Western Australia, however, remains operational.

It targets a production of 2.7 mt in FY14 against 2.27 mt in FY13.

According to Kulwal, the reducing copper grade in the mine can partially offset productivity improvements.

>jayanta.mallick@thehindu.co.in

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