HAMBURG (Reuters) - Aurubis AG (NAFG.DE), Europe’s biggest copper smelter, is still on the lookout for acquisitions, its chief executive said on Thursday.”We want to, in addition to internal growth, also strengthen by reasonable acquisitions,” Juergen Schachler said in a speech to the company’s meeting of shareholders.Aurubis in January made its first major acquisition since 2011, taking 100 percent control of German copper wire and rod maker Deutsche Giessdraht by acquiring the 40 percent stake held by Chile’s Codelco. Schachler reiterated his previous forecast for the group’s performance in the current financial year. “We expect operating EBT (earnings before taxes) for fiscal year 2017/18 at the very good previous year’s level and a slightly lower operating return on capital employed compared to fiscal year 2016/17,” Schachler said.
Operating EBT is the key indicator of the group’s performance, reducing distortions such as swings in metal prices. Aurubis said in February it was in advanced negotiations to sell its flat-rolled products sector with annual sales of about 1.3 billion euros (1.15 billion pounds)to German group Wieland.The Aurubis supervisory board approved the Wieland sale on Wednesday and the corresponding purchase agreement should be completed in April/May, Schachler told shareholders. A review by competition authorities could take a further six months.Aurubis in December said it would seek growth by expanding into production of other metals alongside copper.
Increasing competition for copper concentrates (ore) from China means Aurubis is focusing on processing complex concentrates that often contain other metals, Schachler said.”China is working on expanding its own smelter capacities ... in doing so they want to no longer be dependent on cathodes (new copper) imported from abroad,” Schachler said.
“For the worldwide smelter industry this means one thing above all: stronger competition for clean copper concentrates.”When more smelters compete for available concentrates, copper treatment and refining charges (TC/RCs) can weaken.TC/RCs are paid by miners to smelters to refine concentrated ore into metal and are a key part of copper industry earnings. World 2018 benchmark TC/RCs agreed in December were down about 11 percent on the year. Aurubis’ focus on processing complex concentrates will help Aurubis to absorb this 2018 reduction somewhat, because it is “able to obtain higher average” treatment and refining charges, Schachler said.The strong dollar is also having a “positive impact on our business”, as the company generates significant income in dollars but most of its costs are in euros, he said.
Aurubis remains “optimistic” about demand for cathodes this financial year and more improvements should be possible, he said.Aurubis said in December it plans to double its sales of non-copper metal by 2022/23.
“We see opportunities and new markets ... for many other metals in addition to copper,” he said.For nickel, a feasibility study is under way about possible construction of a factory for battery-capable nickel sulphate in South Korea in cooperation with Korea’s LS Corp. Aurubis is no longer marketing the metal tellurium as a simple intermediate product but in the form of metal products for differing industrial uses including the solar industry.
Reporting by Michael Hogan; Editing by Dale Hudson