Mumbai: Hindalco Industries'' acquisition of a copper company in Australia is likely to help the domestic company to expand the value chain of the copper business.

The investment will not only generate adequate returns from the current copper operations, but also expand the value chain of the copper business for the Indian company, according to Enam Securities, a leading broking firm.

The Birla group company is in the process of finalising the deal for acquiring the Australian copper company. The acquisition for a gross consideration of A$ 21 million is done through two wholly owned subsidiaries of Hindalco.

Birla Mt Gordon Pty Ltd, a wholly owned subsidiary of Birla Mineral Pty Ltd, which in turn is the wholly owned subsidiary of Hindalco Industries, has entered into a sale-and-purchase agreement (SPA) for acquiring Mt Gordon Operations from Western Metal in Australia.

The acquisition is expected to be completed on 31 October 2003. Mount Gordon Copper has the capacity of processing 600,000 tonnes per annum of chalcocite (copper sulphide) ore to produce 50,000 tonnes of LME A Grade copper cathode.

The Esperanza Open Pit, which supplies the processing plant with 600,000 tonnes per annum of chalcocite ore, is likely to get exhausted in late 2003. In future, ore will be sourced from the nearby Mammoth Underground Mine, which is currently being redeveloped.

During the June ending quarter, Esperanza Pit mining slowed as Mammoth mining ramped up. During this period, while Esperanza mining was 171,300 tonnes of ore at 4 per cent copper, Mammoth mining achieved 170,058 tonnes of ore at 3.9 per cent copper.

Future production of copper is dependent on successful development of Mammoth mine. "We believe that Hindalco''s strategy is right given the changing structure of the copper industry," says Enam Securities. "The investment is likely to not only generate adequate returns from the current copper operations, but also expand the value chain of the copper business for the Indian company."

Aditya Birla group chairman Kumarmangalam Birla says it is the second copper mine in Australia that the group is acquiring. "The acquisition of Mount Gordon is a major strategic step in our move to become a globally competitive, integrated copper player. It is a proactive step to entrench ownership in upstream mines. The acquisition is a good fit with our current Australian operations."