Tongling Nonferrous Metals Group Co, China's top copper smelter, said yesterday half-year earnings jumped 89 percent, as gains from by-products and asset acquisitions offset a lower profit from the company's core business.

Net income increased to 595 million yuan (US$87 million), or 0.46 yuan a share, from 315.5 million yuan, or 0.37 yuan, a year ago, while sales rose 33 percent to 2.1 billion yuan, the company said in a statement to the Shenzhen Stock Exchange yesterday.

Anhui Province-based Tongling Nonferrous attributed the gain to higher prices of its by-products from copper smelting such as sulfuric acid and gold. Gross profit margin for the by-product segment surged 73 percent from a year earlier.

The results were also boosted by increased capacity and sales volume after the company acquired parent assets in the second half of last year via a private share placement, the company said.

Copper output rose 15.5 percent to 317,700 tons in the first half, or 17 percent of China's total production, it said. But Tongling Nonferrous said it was concerned by a sharp drop in profits from copper smelting and its refining business. The company said lower processing fees was behind the fall.

Chinese copper smelters earn the processing charges for copper concentrate supplied by foreign miners such as BHP Billiton.

Gross margins for the copper sector plunged more than 90 percent year-on-year, according to the company, which generated three quarters of its sales from copper.

"When processing fees were lower, sulfuric acid and other by-products brought most of the profits for Tongling Nonferrous," Huatai Securities Co said in a research note.

Tongling Nonferrous dropped 0.67 percent to close at 8.94 yuan yesterday after reporting the results.

(Shanghai Daily August 26, 2008)