Australia's MIM aims to double coal output


MIM said production at its Mt Isa copper smelter and refinery hit record levels in 2001-02

By Geoff Hiscock
CNN Asia Business Editor

SYDNEY, Australia (CNN) -- Australian miner MIM Holding said Monday it aims to double its coal output to 38 million tonnes over the next five years.

MIM is already one of the world's biggest coal exporters, and a major producer of copper, zinc and lead.

It said it was looking at developing two new thermal coal mines in Australia to meet what it said was increasing demand in Asia for power-generating coal.

Delivering its results for the year to June 30, MIM reported a fall of almost 15 percent in net profit to Aust. $88.9 million ($48.5 million), after taking a writedown of A$115.8 million on its two European zinc smelters and a gain of A$82.3 million from the devaluation of the Argentine peso.

MIM holds 50 percent of the Argentine copper and gold mine Minera Alumbrera.

Operating profit before significant items was up 17 percent to A$122.4 million.

'Tough year'

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MIM managing director Vince Gauci said 2001-02 was a "very tough year" for metal prices, with copper down 15 percent and zinc down 19 percent to 15-year lows.

But he said higher coal prices again demonstrated the benefit of diversity. Coking coal was up 19 percent and thermal coal rose 12 percent.

Gauci said MIM had chosen to write down to zero the value of its European smelters at Avonmouth in the U.K. and Duisburg in Germany because of its plans to exit them.

But he said selling the plants was very difficult because of the depressed zinc market.

"Our immediate aim is to purse alternatives that offer better outcomes for our shareholders than closure of the plants, while ensuring that cash losses are contained," he told a briefing.

Coal biggest earner

Coal continues to be the biggest earner for MIM, with earnings before interest and tax of A$421.1 million in 2001-02, up strongly from A$250 million a year earlier.

Copper earnings came in at $302.2 million, while core lead-zinc operations delivered A$25.6 million. The non-core zinc operations in Europe lost A$73.1 million.

Gauci said market volatility made earnings forecasts "more than unusually difficult".

But he said he expected coking coal prices to stay at their current levels this year because supply was restricted. The recent weakness in thermal coal prices was due to a mild northern winter.

"We have confidence in the long-term thermal coal market, which is demand driven as consumption continues to increase for power generation, particularly in Asia," he said.

Shares in MIM are 2.63 percent higher at A$1.17 in Monday afternoon trading. The broader Australian market, measured by the S&P/ASX200, is 0.7 percent higher at 3155.2.