Byrnecut exits race for Hind Copper mines 21 Oct, 2008, 0000 hrs IST,MV Ramsurya, ET Bureau
MUMBAI: Yet another large deal has fallen through due to the ongoing credit crunch. Australia’s Byrnecut Mining, a front-runner in the race for opera ting a Hindustan Copper mine, has withdrawn its plans before the bidding process was to end, citing poor global financial conditions.
The Cloverdale-based Byrnecut, which is a world leader in underground mining, has opted out of the race to explore, develop and operate Hindustan Copper’s Banwas mines in Rajasthan, owing to the ongoing financial turmoil and weak copper prices. The Australian company also lost interest after state-run Hindustan Copper delayed the selection process for almost a year.
“There has been significant material changes in the industry since the date of our original submission (December, 2007) due to the global downturn and fall in copper prices,” Mr Steve Coughlan, MD, Byrnecut Mining, told ET in an e-mailed response.
The Hindustan Copper’s tender in December had brought in global leaders such as Oxiana, Anglo American, Lundin Mining and India Resources, apart from Byrnecut, to bid for the operation of the Banwas copper mine in Rajasthan’s Jhunjhunu district. The Banwas deposit is estimated to have about 25 million tonnes in reserves with 1.69% copper content.
A Hindustan Copper spokesperson declined to comment on the issue. It has also been learnt that Byrnecut was scheduled to invest Rs 500 crore to develop the mine and also for the beneficiation of resources.
As per the terms of the bidding process, if selected, Byrnecut would have been appointed contractor for operating the mine, for which the Australian company would have earned an income based per cost of tonne of copper, said sources close to the development.
The global financial meltdown has crimped banks’ lending powers resulting in a tight liquidity crunch in most countries, including Australia. Companies have faced difficulties in accessing funds for their growth plans forcing many to alter or drop their plans, even at the cost of affecting their growth strategy.
The weak macro economic situation has also pushed down copper prices on concerns of a slowdown in demand for consumer goods. Copper has recently fallen to a 33-month low after the US Federal warned that the US economy, the largest market in the world, faces a financial threat and bleak economic data.
Listing the delay as also one of the reasons, Mr Coughlan of Byrnecut said: The inability of Hindustan Copper to finalise the discussions in a reasonable period of time was also of concern.”
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