BULGARIA EXPANSION STRENGTHENS UMICORE COPPER ARM

Views on BG | February 18, 2002, Monday // 00:00

Reuters
By Amanda Cooper

Belgium's Umicore will complete a 30 percent expansion of copper production capacity at its Bulgarian plant this year while it considers selling its flagging copper division as world prices falter.

"We have invested quite a lot in the course of the last couple of years to modernise and expand capacity that will come on stream in 2002," Marc Grynberg, Umicore chief financial officer, told a briefing of London analysts.

The sharp decline in the copper price last year slashed operating profits at Umicore's copper unit by nearly 50 percent, raising the chances of it joining forces with a rival European producer or even getting rid of the division altogether.

When Umicore bought the Pirdop copper refinery in 1997 it pledged to spend some $220 million by the end of this year in revamping and expanding the old anode plant, which suffered a technical hiccup late last year.

Umicore aims to bring copper anode capacity to 210,000 tonnes a year at Pirdop, run by the Bulgarian unit Umicore Med, from its present level of around 155,000 tonnes. Most of the output is sent to the company's Olen refinery in Belgium where it its converted into other products.

"We're getting progressively there --to 210,000. In 2002 we we will see substantially higher production than in 2001 but not 210,000 tonnes because full capacity will only be available in the second half of the year," Grynberg said.


BULGARIA EU MEMBERSHIP APPROACHES

A newly-refurbished copper refinery in a country queuing for European Union membership could be seen as an attractive asset for potential buyers should Umicore sell.

Grynberg pointed to improved performance at the copper division, which includes Olen, Pirdop and a plant at Avellino in Italy.

"We remain committed to reaching the 12 percent return on capital employed (from around 3.0 percent in 2001) but we believe we need to participate in the consolidation in the copper market," Grynberg told the briefing.

At a news conference on Friday Umicore Chief Executive Thomas Leysen said the company wanted to lead consolidation in a European copper sector damaged by overcapacity and mentioned a sale of the copper business as one of the options.

Pirdop, which gets its raw material from the nearby Asarel copper mine, achieved production of only 145,000 tonnes of anodes in 2001 after a scheduled maintentance closure ran for longer than expected, causing a pile-up of concentrates.

"We shut down for five to six weeks in October/November for maintenance but also to carry out work on the modernisation project. But the start-up was difficult and took until mid-January to solve," Grynberg said.

"We lost some production and revenues that we could not compensate for in 2001."

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