Others News
- Chinalco buys take in Yunnan Copper
Date: 1-Nov-2007 Sources: (Shenzhen Daily)
ALUMINUM Corp. of China (Chinalco) paid 7.5 billion yuan (US$1 billion) in cash for a controlling stake in Yunnan Copper Group Co. in the biggest acquisition in the country's metals industry this year.
Chinalco, China's largest aluminum maker, bought 49 percent of Yunnan Copper, China's third-largest copper producer, to diversify its business, Lu Youqing, vice president at Beijing-based Chinalco, said yesterday. Both Chinalco and Yunnan Copper Group are unlisted, State-owned companies.
The acquisition, announced in August, was formally agreed at a signing ceremony yesterday and follows Chinalco's purchase the same month of a stake in Peru Copper Inc. for US$860 million. Yunnan Copper Group holds 34.5 percent of Shenzhen-listed Yunnan Copper Industry Co., which has a market value of 99 billion yuan.
'The government is counting on Chinalco as a leader for consolidation,'' Lin Haoxiang, a Shanghai-based analyst with Guotai Junan Securities Co., said.'China will be short of copper for many years to come.''
Shares of Yunnan Copper Industry have soared since the plan was announced in August on optimism that Chinalco may inject assets into the company.
'We are aiming to become a diversified metals producer,'' Lu said. 'We will focus on copper business development and acquisitions in the next few years, and we hope to make the copper assets publicly traded eventually,'' he said, without giving a timetable.
Chinalco chairman Xiao Yaqing said Oct. 19 that Chinalco plans to buy more overseas copper-mining companies to meet rising demand. Peru Copper Inc., based in Vancouver, owned the South American nation's third-largest deposit of the metal.
'Xiao is ambitious and very capable in management,'' said Lin at Guotai Junan Securities. 'Chinalco is strong in financing, and there is a chance for them to make copper a big business.''
Copper prices have rallied 23 percent this year, partly as demand from China helped shrink stockpiles. London Metal Exchange copper futures, which touched a record US$8,800 a metric ton last year, traded at US$7,785 a ton yesterday.
Mining companies in China are likely to buy metal deposits and oilfields in Africa, Latin America and Australia to feed demand, Citigroup Inc. said this month. The Asian nation needs more commodities to fuel growth and almost doubled copper imports in the first nine months of this year.
In another development, Aluminum Corp. of China Ltd. (Chalco), the listed arm of Chinalco, said yesterday that its average alumina price fell 25 percent in the third quarter to 3,035 yuan per ton.
The average aluminum price was largely steady at 19,931 yuan per ton in the three-month period, Chalco's chief financial officer Chen Jihua said.
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