Jiangxi Copper to invest US$1.4b in Peru plan

PUBLISHED : Thursday, 27 March, 2008, 12:00am
UPDATED : Thursday, 27 March, 2008, 12:00am

Jiangxi Copper, the mainland's largest integrated copper producer, plans to invest about US$1.4 billion with a partner to develop metal mining projects in Peru, aiming to boost its self-sufficiency for copper concentrate to 50 per cent.

The mining projects will be developed by Northern Peru Copper Corp, a Canadian firm Jiangxi Copper and China Minmetals Corp bought earlier this year for C$455 million (HK$3.48 billion), according to chairman Li Yihuang.

Mr Li said the Galeno deposit in northern Peru, which is undergoing a feasibility study, is expected to produce 142,000 tonnes of copper concentrate annually over its 20-year life.

'The project could start production by 2012 at the latest and most of the output will be sold to Jiangxi Copper, which would greatly increase our ore supply,' Mr Li said.

The Galeno project, in which the Guixi, Jiangxi-based company has a 40 per cent stake, has total copper reserves of 3.3 million tonnes, gold reserves of 79 tonnes and molybdenum reserves of 86,000 tonnes. Minmetals holds the remaining 60 per cent.

Jiangxi Copper on Tuesday reported lower than expected 2007 earnings of 4.15 billion yuan (HK$4.59 billion), down 13 per cent from the year before. The company blamed lower processing fees, higher costs and its dependence on other firms for its copper concentrate for dragging down earnings.

Mr Li said the company planned to add mines to supply 50 per cent of its smelters' raw material needs by 2012, up from 30 per cent last year.

'We'll press ahead with resources acquisitions at home and abroad to boost our control of resources, with the goal of becoming a poly-metallic company,' Mr Li said.

Everbright Securities analyst Jiang Yukun said Jiangxi Copper was likely to acquire Lengshui mine in Guixi county and Zhangshiba mine in De'an county, both in Jiangxi province, from state-owned parent Jiangxi Copper Group.

The two mines make up about 80 per cent of the lead and zinc reserves in Jiangxi. Mr Jiang said the mines may have estimated reserves of more than 3 million tonnes.

executive director Wang Chiwei said Jiangxi Copper had set aside 4.3 billion yuan this year for capital expenditure, up 43 per cent from 3 billion yuan in 2007. This includes funds for investments and acquisitions.

At the end of last year, Jiangxi Copper held reserves of 9.12 million tonnes of copper, 260 tonnes of gold, 7,379 tonnes of silver and 270,000 tonnes of molybdenum.