New | China’s MMG eyes one more acquisition to reach its 2020 goal

MMG, the overseas nonferrous metals mining unit of state-owned metals trading major China Minmetals, will need to make another acquisition bigger than the US$1.36 billion copper mine in Congo it bought in early 2012 to realise its goal to become a “mid-tier” global mining firm by 2020, according to chief executive Andrew Michelmore.

But it is not pro-actively looking to clinch any deal, since it would have difficulty raising more financing given its stretched balance sheet after a US$7 billion copper mine acquisition in Peru last year.

“We probably need to do one more investment to achieve our goal,” he said in an interview. “A project a bit bigger than Kinsevere [in the Democratic Republic of Congo] may [suffice]. If an opportunity as big as Las Bambas [in Peru] comes up, it is also fine.”

The firm has set a target to become one of the world’s “top mid-tier base metals mining companies”. Based on MMG’s current market capitalisation of around US$1.3 billion, it is still far from the goal, but if enterprise value is used as a benchmark, it would be close to being considered a mid-tier player, he said.

Enterprise value is the sum of market capitalisation and debt. MMG, backed by loans from state banks for its role in helping the mainland enhance metals supply security, has a higher net debt-to-shareholders’ equity ratio than its peers, which stood at 269 per cent at the end of June.

Michelmore said MMG is focusing on bringing the Las Bambas copper mine on stream early next year, whose completion time and construction budget control performance are key for it to obtain future financing.