Top Brazil Copper Smelter Rises on Cost-Cutting Relocation Plan
Paranapanema SA (PMAM3), Brazil’s biggest copper smelter, rose to the highest in three months after its chief executive said he is revising plans to install a new plant in the country in a bid to reduce costs.
Shares rose 1.3 percent to 4.85 reais at 2:33 p.m. in Sao Paulo, and gained as much as 2.7 percent, while the Ibovespa Small Cap Index was little changed. Paranapanema is the index’s best performer in the past year with a 119 percent surge.
The company is considering installing a processing plant in Santo Andre, Sao Paulo state if it proves a more profitable option than Espirito Santo state, CEO Edson Monteiro said. Paranapanema bought the facility in Poland and plans to rebuild it in Brazil using financing from Banco do Nordeste do Brasil, as part of a 1.22 billion-real ($520 million) investment plan.
“The economic scenario is leading the company to rethink whether or not this is the solution,” Monteiro said in an interview in Bloomberg’s Sao Paulo offices.
The company is 65 percent through a 2011-2015 investment plan that includes a 180 million-real investment in the Polish plant and upgrading existing installations.
Sales reached a record high 1.29 billion reais in the second quarter, according to data compiled by Bloomberg. The company had a loss of 12 million reais in the second quarter, attributed to currency volatility. With improved operational results, the company should return to profitability, Monteiro said.