IRC Swings to $1 Million Profit in 2011 on Ramped Production

IRC Ltd. (1029), the Hong Kong-listed company mining iron ore in Far East Russia, swung to a profit in its first full year of production as its Kuranakh mine reaches full capacity.

Net income rose to $1 million in the year ended Dec. 31 from a loss of $82 million a year earlier, IRC said today. Sales increased fourfold to $122.2 million.

IRC, an affiliate of gold miner Petropavlovsk Plc (POG), said last month it beat its output target by 6.7 percent for iron ore concentrate and ilmenite, the material used to make paint pigment. It’s aiming to produce 4.5 million tons of iron ore in 2014 after starting its flagship K&S mine, located in Russia, 60 kilometers (37 miles) from the Chinese border.

“We are achieving good prices,” Executive Jay Hambro said by phone. “The more we produce, the more power we have. That means we start making savings with transport and our unit costs go down.”

IRC, which in 2010 became the second company from Russia to list in Hong Kong, produced 800,291 metric tons of iron ore concentrate and 63,490 tons in 2011, the company said Jan. 12. The company is planning to double ilmenite production to 125,000 tons, it said today.

“We have not seen any slowdown in our demand,” Hambro said. Demand from India may play in to support iron prices, he said. “India remains a small exporter but over the next 18 to 36 months, it will become a net importer. There would be quite an influence on the price.”

Editors:

To contact the reporter on this story: Michelle Yun in Hong Kong at myun11@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

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