LONDON -(Dow Jones)- U.K.-listed Kazakh miner Kazakhmys PLC (KAZ.LN) has sold around 90% of this year's forecast copper cathode production through fixed contracts, the company's head of corporate communications said Thursday, noting that demand for copper remains robust. "We've had strong demand from customers and have signed all of our contracts both in terms of volume and premium," John Smelt said in a phone interview. He noted that some of Kazakhmys' forecast production isn't contracted on purpose to provide the company with flexibility during the year. Kazakhmys said demand for copper remains strong, particularly in China which accounts for a large portion of Kazakhmys' sales. Copper prices hit a record high on the London Metal Exchange last week due to burgeoning demand from emerging markets such as China, the world's largest producer. LME copper for delivery in three months hit an intraday record high of $9,781 a metric ton on Jan. 19 before dropping the following day after China released higher-than-expected economic growth for the fourth quarter. The higher-than-expected gross domestic product figure of 9.8% sparked fears that the Chinese government may have to tighten its monetary policy once again in order to prevent the economy from overheating. Such policy tightening could dampen demand for the red metal, copper traders said. Smelt said he wasn't concerned about the Chinese economy overheating. "The relentless march continues on. China is going to go through periods of up and down but urbanization and modernization will continue to be a key driver for many years to come," he said. Separately, Smelt said the company expects this year's copper cathode production from its own operations to remain broadly flat compared with 2010. Copper cathode and silver production from Kazakhmys' own operations both dropped to 303,000 tons and 14.1 million troy ounce respectively in 2010, but beat their full-year targets of 300,000 tons and 14 million ounces respectively. Copper output dropped 5.3%, partly due to lower grades, while silver output dropped nearly 17% because 2009 output was boosted by a significant release of silver from stored material. "I don't think there will be a significant change in copper grade next year. It will be around 1%," Smelt said. The final copper cathode guidance for next year will be confirmed at Kazakhmys' full year results on Mar 29, he added. Kazakhmys Thursday reported results that were broadly in line or better than the company expected, even though volume production dropped in three out of the company's five main commodities. Kazakhmys produces copper cathode, silver, zinc and gold and owns half of Kazakhstan's largest power station. It is also exploring for oil. Gold output from Kazakhmys own operations dropped to 126,500 ounces and missed guidance of 130,000 ounces. Zinc and power generation surpassed the company's expectations. Zinc in concentrate rose about 12% to 167,000 tons on year, beating the company's guidance of 135,000 tons while power generation increased nearly 14% to 11.07 terrawatt hours on year compared with the company's guidance of 10.4 TWh. Separately Smelt confirmed that the sale of Kazakhmys' MKM German downstream copper products producer was still ongoing but declined to provide further details. The unit has been up for sale since early 2010. Kazakhmys is also mulling listing 4% of its shareholding in Hong Kong. The secondary listing would be valued at $500 million to $600 million, according to sources familiar with the matter. Smelt declined to comment on the timing of a potential listing. Kazakhmys' shares were up 1.2% or 19 pence at 1552p as of 1113 GMT. |