Shares in Kazakhstan-based copper miner KAZ Minerals are +7% this morning after the company reported broadly positive half-year results, with gross revenue +31% YoY and pre-tax profit +48% on the back of growing H1 copper production volumes (+18% to 140k tons), higher realised prices of copper concentrate (+17% YoY) and copper cathode (+19% YoY), as well as the company’s ability to keep costs stable.

More importantly, KAZ Minerals upped its copper production guidance, which is now expected to grow to 270-300k tons by the end of the year. This should help the miner to offset some of the fall in copper prices, which are down 22% this year from June highs on the back of US-China trade war fears. If these geopolitical concerns could be taken off the table, the overall commodity market outlook appears to favour copper producers due to steady demand growth and declining global production at existing mines.

The latest positive results are a ray of sunshine for investors who had to weather a 28% drop in the miner’s share price just 2 weeks ago when the company announced its purchase of the Baimskaya copper deposit in the Arctic Chukotka region from Russian oligarch Roman Abramovich. The need to borrow $900m to finance the deal (a set-back for company’s rapid de-leveraging plans) and the general market aversion to anything to do with Russia soured investor view of the deal.

Nevertheless, the economics of the Russian copper project appear favourable to KAZ Minerals and are set to increase the company’s copper volumes by 250k tons per year, nearly doubling its full output. Markets might be currently bearish on everything that has the word “Russia” in it, but as long as the country houses much of the world’s periodic table, all that mineral wealth is going be benefit London investors.

Artjom Hatsaturjants, Research Analyst at Accendo Markets, 16 August 18