Copper major MMG’s new chief executive sticks to its ‘top mid-tier’ ambition by 2020
Hong Kong-listed overseas mining unit of state-owned metals trading giant China Minmetals currently has market capitalisation of US$3 billion
MMG, the Hong Kong-listed overseas mining unit of state-owned metals trading giant China Minmetals, will stick to its goal of ranking among the world’s “top mid-tier” mining firms by 2020, according to its new chief executive.
Asia’s largest listed copper miner by output will aim to achieve this via acquisitions, expansion of mines already in production as well as development of early-stage projects, said Jerry Jiao Jian, who took the helm from Andrew Michelmore a month ago.
“Our goal is still the same,” he said in an interview with the South China Morning Post. “We try to develop ourselves to be among the top mid-tier miners by 2020.”
“When we say we will maintain our business model and strategy, it also means we will maintain the quality of our operations and our team.”
We do not draw a line between China and the outside world [when it comes to talent scouting]. Within MMG, we already have Chinese managers who have been in Australia for a long time, besides mining talent from Brazil, Canada and South Africa
Jiao said MMG considers firms with market capitalisation of US$10 billion to US$15 billion to be “mid-tier” players, which include Chilean copper miner Antofagasta, Canada-based coal and metals producer Teck Resources and gold miner Newmarket Gold.
Although MMG only has a market capitalisation of US$3 billion, he said “enterprise value” –
an alternative measurement often used by fund managers to assess companies – also counts when considering a firm’s scale. Enterprise value is the sum total of market capitalisation and debt.
Highly debt-leveraged MMG has an enterprise value of around US$10 billion, thanks to backing from its state-owned parent and its easy access to low-cost capital from Chinese banks, according to Jiao.
A vice president and 25-year veteran of the company’s parent China Minmetals, Jiao was formerly MMG’s non-executive chairman.
He has been on MMG’s board and participated in its goals and strategy setting since late 2010 when it completed a US$1.85 billion acquisition of assets from its parent.
The deal gave MMG a portfolio of zinc, copper, lead, silver and gold projects mostly in Australia, with some in Laos and Canada.
Michelmore,who stepped down in February, had been at the helm of MMG since 2010. He oversaw the company’s US$1.36 billion acquisition of a copper mine in the Democratic Republic of Congo in 2012, and the 2014 acquisition of the Las Bambas copper mine project in Peru that it brought from half-built to commercial production for a total of US$10 billion.
The Las Bambas copper mine is one of the world’s largest with an annual output capacity of 450,000 tonnes.
Jiao said MMG’s acquisition criteria is not to fixate on numerical parameters such as a minimum forecasted rate of return.
Rather, it boils down to “whether we can make a difference by leveraging our current operating hubs, systems, team, infrastructure and [government] relations.”
Although the acquisition of Las Bambas means MMG is already Peru’s largest copper miner, Jiao said it is not considered a major player in the famous “copper belt” mining region in Africa where it has room to develop more.
He said his appointment as MMG’s chief executive will not necessarily herald more appointments from the Chinese parent to Melbourne, Australia-headquartered MMG, which will stick with its policy of attracting talent that is both technically capable and can recognise and work under the company’s culture akin to that of its international rivals.
“We do not draw a line between China and the outside world [when it comes to talent scouting],” he said. “Within MMG, we already have Chinese managers who have been in Australia for a long time, besides mining talent from Brazil, Canada and South Africa.”
