Global resources company MMG reported a profit fall of 75 per cent to $35.9 million for the first half of 2013.
It comes amidst lower commodity prices and higher costs. Increased copper production could not counterbalance this.
The company, which is supported by Chinese state-owned China Minmetals Corporation, has at its core, copper and zinc, both of which fell in prices during this period.
The company had aimed to expand into a $US20 billion mining giant by way of acquisitions.
MMG chief financial officer David Lamont said fluctuating commodity prices resulted in $86 million on earnings before interest and taxes in the first half, The Australian reported.
He said the EBIT had fallen by $45 million due to a seven per cent fall in the average copper price, $29 million due to a two per cent fall in the average zinc price and $12 million due to a fall in gold price by eight per cent.
MMG slashed more than 80 jobs at its Golden Grove mine after the company went through restructuring.
Zinc prospects will be decided on whether new mine supply can meet demand.3
The company has warned the community near Cloncurry to be prepared for more traffic in the area.
According to CEO Andrew Michelmore, the company mined 41 per cent more iron ore in the first half of 2013 compared to the same period in 2012.
It mined eight million tonnes.
“Despite this increase in mining activity, our operating expenses increased by 15 per cent,” he said.
He is optimistic about copper’s prospects, saying industrialisation in China and other developing nations would drive demand.
Michelmore said the company is still looking at growing despite the negative result.
“The target we have set we would not be able to achieve via organic growth, so we definitely continue to look for opportunities in the market,” Michelmore said.
MMG acquired Anvil Mining last year for $1.3 billion. Copper producer Anvil Mining concentrates on Africa.
Alliance Aviation recently extended its contract with MMG for fly in, fly out services.
The aviation company will run eight weekly services between Phosphate Hill and Townsville, and eight from Cairns to Lawn Hill and twelve from Townsville to Lawn Hill for MMG.