Metals miner MMG keeps eye out for overseas acquisitions as it tackles mine blockades in Peru
- The overseas mining unit of state-owned China Minmetals will press on with its goal to rank among the world’s ‘top mid-tier’ mining firms, says CEO
MMG, the overseas mining unit of state-owned China Minmetals, will press on with its goal to rank among the world’s “top mid-tier” mining firms by next year despite the challenges it faces in Peru, its most profitable market, said its chief executive.
To realise the target it first unveiled in 2014, the Hong Kong-listed firm will keep an eye out for potential acquisition targets in the mining hot spots of South America, Africa and Australia, said Geoffrey Gao Xiaoyu, who took the helm last August.
“We have delivered a large part of that growth through the commissioning of Las Bambas [a copper project in Peru] and Dugald River [a zinc project in Australia],” he said in an interview after delivering his first annual results as chief executive.
“This year is the 10th anniversary of MMG [as a listed firm], we will have new goals for the next five to 10 years and definitely growth will still be a very important part of our story.”
Former chief executive Jerry Jiao Jian told the Post last July that MMG considered firms with market capitalisation of US$10 billion to US$15 billion to be “mid-tier” players. MMG’s market value stood at US$3.9 billion at Thursday’s market close.
After spending a total of US$10 billion on the half-finished Las Bambas in 2014 to bring it to production, and US$1.3 billion to make Dugald River operational last May, highly-leveraged MMG has been paying down its debt. its net debt fell US$733 million to US$7.6 billion last year.
MMG said on Wednesday its net profit had fallen by just over a half to US$68.3 million last year, because of lower metal prices and the higher cost of servicing debts amid rising interest rates.
Since last month, it has been troubled by a road blockade erected by villagers in Peru stemming from a claim for compensation for a pre-existing right of way that overlaps with a public road on farmland transferred to a community as part of a resettlement agreement in 2011.
Production has not been affected so far, but the stock of ore at a port has been exhausted by the blockade, resulting in delays of shipments to customers.
Other mines in Peru have also been hit by similar road blockades, Gao said.
MMG was also affected by another road blockade put up by villagers in 2016, who were dispersed after the local government declared a state of emergency.
“This time it is more complicated as there are a lot of women and children involved,” Gao said. “I believe this is the biggest concern for the government [when considering its course of] action to restore order.
“We are in dialogues with both the community and the government to find a solution and to make sure the community will benefit from our mining activity.”
