YK Cha, the chief executive of Kazakhmys, revealed plans to step down at the end of the year as the FTSE 100 mining group posted record half-year profits of more than $1 billion thanks to the booming copper price.

Mr Cha, who had been with the Kazakhstan mining specialist for 10 years, wants to spend more time in his native Korea, Kazakhmys said, although he will stay on as a special adviser to the board.

Mr Cha is credited with sharpening up Kazakhmys's sales and marketing strategy and developing its operations in Kazakhstan neighbour China.

Although the miner is beefing up its board with the arrival of David Munro as strategy director and Philip Aiken as an independent director, no immediate replacement for Mr Cha was named today.

News of his decision came as Kazakhmys posted a 124 per cent increase in pre-tax profits to a record $1.08 billion for the six months to the end of June, buoyed by an 82 per cent jump in the price of copper during the period.

Revenues jumped by 90 per cent to $2.3 billion as production of copper zinc and gold all increased. Kazakhmys increased the dividend to 12.8 cents a share.

Vladimir Kim, the chairman, said: "Our strong 2006 earnings at the half year have already exceeded the full-year 2005 earnings following a period of particularly buoyant commodity prices."

Like other groups in the sector, Kazakhmys has benefited from the recent surge in the price of commodities, amid ongoing worries about a potential shortage of supply.

"Supply fundamentals remain tight as uncertainty remains over production from a number of geographic regions. We see copper prices staying above long-term historical averages for the remainder of the year and into 2007," Mr Kim added.

Julian Chillingworth, the chief investment officer of Rathbone Unit Trust Management, told Times Online that economic expansion in China and the needs of the large car manufacturers in the United States had been driving demand for copper.

"It's not just demand, though, it is supply as well. There hasn't been that much new production in recent years. This normally takes between five and seven years and it will happen," Mr Chillingworth said. "All the producers are trying where possible to get their production numbers up."

Mr Chillingworth said he believed Kazakhmys could consider expansion opportunities in China and possibly South America in the future, although he said the company had sufficient production not to force it into potentially expensive acquisitions.

He said one of the key factors dictating future copper prices was the level to which the US and China economies slow over the next several years.

Shares in Kazakhmys rose 12p to 1,278.00p. The group has a stock market value of more than £5.9 billion.

Richard Hunter, head of equities at Hargreaves Lansdown, the stockbroker, said: "The story of Kazakhmys is inevitably the story of the copper price, which many in the market - and the company itself - expect to continue its exponential growth.

"The shares have risen nearly 140 per cent since their flotation last October - and 28 per cent in the last six months alone. If there are any slight concerns, they would be that the shares are almost a purely copper play and of course the group's base is in the politically risky former Soviet Union.

"Also, a slight tailing off of production volume has been masked by the strength of copper."

For more on the shares click here

BACKGROUND

• Former Kazakhmys boss gets £250m

• Higher costs hit Kazakhmys

• Kazakhmys's departing chief sells shares for nearly £500m

• Kazakhmys hit by resignation

Kazakhmys is not for the faint-hearted

Far from being the ideal widows and orphans stock, it is developing in ways that calm the nerves.

Related Internet Links

• Kazakhmys company information

• Kazakhmys share price chart

• Kazakhmys forecast

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