COMMERCIAL Future profits will rise after high expenditure

Press, Volume CXI, Issue 32566, 27 March 1971, Page 22

COMMERCIAL Future profits will rise after high expenditure

(N.Z. Press Association—Copyright) SYDNEY, March 26. Conzinc Riotinto of Australia, Ltd, does not expect a.major rise in earnings this year, but future earnings will reflect the company’s heavy capital expenditure, the chairman (Sir Maurice Mawby) said at the annual meeting in Sydney yesterday.

The first full year of operations of the Bougainville copper project will be 1973.

“In that year the group’s earnings should rise to a new level to reflect the results of the heavy capital expenditures we are incurring on this, and on the Hamersley project. In the meantime earnings are not expected to show major growth. “Earnings by Hamersley

and Comalco are expected to increase ' progressively over the next two years, but revenue from our lead-zinc companies will be very much lower in 1971 and perhaps 1972 until a firmer market position is re-established for these two metals,” Sir Maurice Mawby said. Deliveries of both lead and zinc had been reduced because of the over-supply position in the market. Comparable action is also being taken by most of the other leading world producers of these metals. However, there wer- signs that the market position, for zinc at least, was becoming firmer. “On the industrial front some uncertainty exists at the present time. Negotiations had continued with the Broken Hill unions for a renewal of the three-year industrial agreement. The unions had indicated that they proposed to reduce work effort, and this will severely curtail production. “Over the longer term our diversified operations will undoubtedly offer a security of income that had not been available in past years. Sir Maurice said “Early next month the start up of the first trial furnaces in the new smelter at Bluff will take place with commercial production at a rate of 73,000 tons of metal a year scheduled for early July. “The important new venture with Alex Harvey Industries, Ltd, for the production of aluminium extrusions and fabricated architectural products, will get under way next month. N.Z. development "The developments in Australia and New Zealand reflect the expanding interests of Comalco in the secondary processing activities of the aluminium industry,” he said. “Construction contracts had been let by Hamersley as part of the expansion programme which will increase ore production to 37.5 m tons a year by 1974. These include a major contract for stockpile and conveyor foundations at East Intercourse Island near Dampier where Hamersley’s second port is being developed. Development of the new mine at Paraburdoo is on schedule,” Sir Maurice said. “The steelmaking tests, using ‘Himet,’ in the United States and Japan had been encouraging, however the size of the proposed plant requires analysis and testing of design assumptions to be certain that production targets will be achieved. “Detailed geological mapping of the Koodaideri iron ore deposit, some 50 miles south-east of Wittenoom is under way and results should be available soon. The deposit, which is held under option by Mount Bruce Mining Pty. Ltd, (a subsidiary company of Hamersley) from Hanwright Iron Mines, contains approximately 2000 m tons of iron ore with a total average grade of 59 per cent iron, and smaller tonnages of a higher grade.” To cost S i 00m The Bougainville copper project is now estimated to cost about s4oom, Sir Maurice said. “The 1969 annual report said that the project which is now under construction is estimated to cost in excess of s3som. At that stage the first definitive estimate for the project had just been prepared. “During the past year there has been some change in the scope of the project. It had been decided to increase the capacity of several sections of the crushing and concentrating plant to allow flexibility in initial operations, and to make future expansion more economic,” he said.

“Most of the design and engineering for the project has been completed and the majority of major contracts let. This coupled with the fact that construction has advanced materially, had enabled the preparation of estimates on much more detailed basis than previously. Some inflation of labour, material and service costs has occurred in this project, as it had in industry in Australia, and world wide, but these cost increases did not affect the viability of the project.” Sir Maurice said: “The fixed capital expenditure required to bring the Bougainville project into production will be financed on the basis of approximately one-third equity and two-thirds loan moneys.

“The equity will be subscribed 20 per cent by the administration of the Territory of Papua and New Guinea, and 80 per cent by Bougainville Mining Ltd, in which C.R.A. will be the major shareholder.”

Arrangements for loan finance have been made with North American, European, Japanese and Australian sources.

U.E.B. plans to reorganise

U.E.B. Industries Ltd, will bring its packaging, textiles, building materials and engineering groups under central control on April 1. After the change, U.E.B. Packaging Ltd, and U.E.B. Textiles Ltd, will cease to exist. The new structure will give U.E.B. Industries Ltd, three divisions—packaging, building materials and textiles, with a central services organisation controlling certain groups, including engineering and head office activities. The managing director of U.E.B. Packaging Ltd, (Mr G. S. Phillips) will become the director of packaging and building materials, and the managing director of U.E.B. Textiles Ltd, (Mr J. H. Gemmell) will be the director of textiles. C.S.R. land sale Negotiations are continuing with the Fiji Government for the disposal of land owned by the Colonia! Sugar Refining Company, a C.S.R. spokesman confirmed in Sydney yesterday. He said the company had no statements to make on the negotiations at present. He expected any land deal made between C.S.R. and the Fiji Government to be announced by the Government in Suva.