Stone to explore minerals abroad

PUBLISHED : Wednesday, 10 October, 2007, 12:00am
UPDATED : Wednesday, 10 October, 2007, 12:00am

Stone Resources is borrowing 85 million yuan from China Development Bank to explore for mineral resources in Yemen and Tanzania.

'The country has a new policy to support domestic companies that explore minerals overseas such as zinc and nickel as supply is seriously insufficient,' said Duan Yongji, the chairman of Stone Group Holdings, which holds a 16.7 per cent stake in Stone Resources. 'We will spend two to three years diversifying our core business into the mineral industry.'

In January, the Beijing maker of computer printers and health-care products obtained exclusively initial two-year exploration rights for zinc and lead in a 1,000 square kilometre area near Tabaq, Yemen.

In May, US-listed Tanzanian Royalty Exploration Corp granted Stone the right to explore for nickel and gold in Tanzania.

Stone Group, Mr Duan and six independent third parties established Stone Resources in June with registered capital of HK$60 million.

Mr Duan, who owns 20 per cent of the joint venture, said the mainland would consume 100,000 tonnes of nickel per year by 2010, but domestic supply had peaked at 50,000 tonnes.

Stone Resources will invest 10 million yuan for initial exploration overseas and further expand its investment to as much as US$1 billion if it discovers any mineral resources.

'We will do the exploration but not the mining,' Mr Duan said. 'We will probably know the total reserves of our mines after 18 months and may consider selling the mining rights at that time.'

Mr Duan said the company benefited from the closer Sino-African ties while US firms might face the risk of terrorists' attacks if they set up offices in Yemen and Tanzania.

'Although Stone Resources may get cash-flow support from China Development Bank, it is not sure that it will discover mineral resources in Yemen and Tanzania,' said Michael Wong, a research director at Hantec Investment International.

Mr Wong said the African mineral sector was 'quite competitive'.