Minmetals puts non-core assets on the block

PUBLISHED : Wednesday, 30 March, 2011, 12:00am
UPDATED : Wednesday, 30 March, 2011, 12:00am

Minmetals Resources has put its trading and processing assets up for sale so it can focus on the Australian mining assets it bought last year.

Minmetals had positioned itself as a multimetals miner and decided on Monday to dispose of the non-core assets, chief executive Andrew Michelmore said yesterday.

Michelmore said the company aimed to complete the sale by the end of the year, adding that the non-core assets were valued at US$800 million to US$950 million last year.

'It is too early to comment on the specifics like whether they will be sold as a bundle or piece by piece, or what way the sale will be done,' he said. 'But our target is to maximise value.'

Last year, Minmetals completed a US$1.85 billion deal with its parent, China Minmetals Nonferrous Metals (CMN), to buy a portfolio of zinc, copper, lead, silver and gold projects mostly in Australia, with some in Laos and Canada. CMN bought the assets in 2009 from Australia's OZ Minerals for US$1.4 billion.

Wang Lixin, who becomes the chairman of Minmetals on Friday, said CMN was a natural and capable potential buyer of the trading and processing assets. 'But if there is another buyer who can offer a better price, [Minmetals] will certainly adhere to its goal of maximising the assets' value,' he said.

The assets include alumina and aluminium trader Minmetals Aluminium, aluminium fabrication firm North China Aluminium, aluminium cans maker Qingdao MC Packaging, flexible metals cables maker Yingkou Orienmet, alumina refiner Guangxi Huayin, copper rods and wires maker Changzhou Jinyuan Copper and nickel importer Sino Nickel.

Wang said Minmetals might buy some of CMN's assets to avoid intra-group competition, and CMN would 'strongly support' Minmetals' mining business growth.

Besides various long-term non-ferrous metals importing contracts, CMN has a 60 per cent stake in Northern Peru Copper that owns eight million tonnes of copper resources in Peru. The project was originally expected to start production next year, but was delayed to the end of 2014, according to industry publication MetalBulletin, which said a new feasibility study was required.

On Monday, Minmetals posted a net profit of US$409.4 million for last year, up from US$215.8 million in 2009, helped by hefty contributions from the Australian assets that accounted for 54 per cent of sales and 94 per cent of earnings before interest and tax.

Michelmore said the group planned to sell new shares to raise up to US$1 billion this year to repay debt owed to CMN as a result of the acquisition and to finance mine development and exploration.