April 4, 2016 / 6:47 PM / 2 years ago

UPDATE 1-Copper firm Aurubis to shun Africa in hunt for acquisitions

* CFO sees strong copper demand in Europe

* Says dollar strength helps boost earnings (Adds detail, comment)

By Pratima Desai

SANTIAGO, April 4 (Reuters) - Aurubis, Europe’s biggest copper smelter, is looking for potential acquisitions in emerging markets, but prefers those with less political risk, its chief financial officer said on Monday.

“So that means Africa may not be at the top of our list, we are also a little shy of Chinese opportunities,” Aurubis CFO Erwin Faust told Reuters on the sidelines of a copper industry conference in Santiago.

Faust added that German-based Aurubis was open to opportunities elsewhere in Asia and in the Americas, but said there was nothing on the table at the moment. “There are not too many opportunities.”

Aurubis’ last acquisition was in 2011, when it bought the rolled copper operations of the Luvata group.

Faust also said spot treatment and refining charges (TC/RCs), the cost of processing ore, were rising.

“We see them in the high $80s (a tonne) now. We expect them to go further because the Peruvian mines coming on stream have good quality concentrate.”

More concentrate on the market may mean miners have to pay higher treatment and refining charges.

Peru’s output of copper surged 43.8 percent in January on a year-on-year basis and is expected to rise further this year as a large project ramps up production.

Faust said it was difficult to work out what was going on with copper demand in China, which accounts for nearly half of global copper consumption, but that physical demand in Europe was “okay.”

“Opinion (on China) changes very quickly, sometimes week to week, definitely month to month,” Faust said. “Demand for wire rod, where we are the dominant player in Europe, has been good.”

Some 70 percent to 75 percent of global copper supply is used by the wire and cable industries.

Faust also said Aurubis was a net beneficiary of the stronger dollar and weaker euro, but not because of the resulting boost to the company’s exports.

“We have a structural long position in dollar,” Faust said. “We have more dollar earnings than costs, that is mainly due to TC/RCs and other things paid in dollars.”

Reporting by Pratima Desai; Editing by Paul Simao

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