Sumitomo Metal Mining Co, Japan`s second-largest copper smelter and biggest nickel producer, said first-quarter profit rose 81% as metal prices climbed.

Net income gained to 45.7 billion yen (US$386 million) in the three months ended June 30 from 25.2 billion yen a year earlier, the company said in a statement to the Tokyo Stock Exchange on Friday.

Profit growth may help the company buy more mine stakes to increase the ratio of ore it provides to its own smelters.

Economic growth in China is driving materials prices higher and processing fees are falling.

The company in April said it will double the ratio of ore it uses from its own mines to 40%.

“Smelting charges are getting squeezed a little bit, that`s why miners are going for owning their own mines,” said Yoji Takeda, who helps manage about US$900 million at RBC Investment (Asia) Ltd.

“That`s been successful and they will probably continue; their cash flow is so strong they can buy more.“

Soaring metals prices have benefited the Tokyo-based company, fueling an 89% gain in its shares this year.

Sumitomo Metal Mining has increased the amount of raw materials it mines and can sell the nickel, copper, zinc, lead, gold and silver it produces for higher prices.

Operating profit at the company`s metals division almost doubled to 49.5 billion yen from 25.3 billion yen a year earlier.

(Bloomberg)

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