Kazakhmys revealed a first-half pre-tax profit of $438 million, which compares to $679 million for the same period last year. The drop in profit was attributed to falling commodity prices and rising costs.
The company's revenue increased from $1.51 billion to $1.57 billion for this six-month period, as production levels were 7% higher. The cost of extraction lags behind the price of the underlying commodity; this means that while metal prices are high, mining firms are willing to pay higher wages to capitalise on the high metal price, but when prices fall, costs still remain high.
Kazakhmys is trading at 302p, up 0.35% on the day, but it is underperforming against the sector as a whole which is up 1.5% on average. Overnight, the HSBC Chinese manufacturing purchasing managers index (PMI) rose to a four-month high, which provided the industry with a shot in the arm.
Kazakhmys has dropped over 62% since the start of the year, partially because of declining copper prices but also because of the 26% stake it owns in struggling miner Eurasian Natural Resources Corporation. If Chinese demand continues to increase we may well see some bargain hunting.