Tuesday March 15, 1:01 PM China's Jinchuan widens ore search to feed growth By Polly Yam
HONG KONG, March 15 (Reuters) - China's Jinchuan Group will double nickel capacity and raise copper capacity 75 percent within the next three years to meet the country's fast-growing demand for both metals, a senior company official said.
The aggressive expansions would put Jinchuan, China's top nickel producer and sixth-largest copper maker, under heavy pressure to secure raw materials abroad, as both ores were in short supply within China, industry officials said on Tuesday.
"The numbers are scary," said an overseas supplier of copper concentrate. "Where will they buy the raw materials?"
Jinchuan produces about 80 percent of China's nickel and operates the country's largest nickel mine, in the northwestern province of Gansu. The mine also contains copper, cobalt and platinum group metals.
But raw material supplies cannot keep pace with expanding metal output. China imported 2.9 million tonnes of copper concentrate last year, as its own mines met only about 30 percent of its needs.
Jinchuan has already taken steps to source raw materials abroad, but the company official said late on Monday it would need more to feed growing output of nickel, a key additive to stainless steel used in household appliances and construction.
Jinchuan aimed to produce between 150,000 and 170,000 tonnes of refined copper and 90,000 tonnes of nickel this year, he said.
RAW MATERIAL BURDEN
The company would start construction of a 50,000-tonne nickel facility in May and, six months later, would begin commercial production at a separate 30,000-tonne line, the official added.
The two new nickel systems would boost capacity to 150,000 tonnes in late 2006, from 70,000 tonnes currently.
Jinchuan, which added 80,000 tonnes of copper capacity in January, would begin building another 150,000-tonne copper facility in May, the official said.
The latest expansion would boost Jinchuan's refined copper capacity to 350,000 tonnes by 2008 from 200,000 tonnes currently.
"It's a burden for their raw material supplies," an analyst for state-controlled research group Antaike said.
The analyst said Jinchuan had bought spot copper concentrate, the key raw material for making the metal, from neighbouring Mongolia and Kazakhstan.
The company does not have any direct investment in foreign mines, the official said, but is looking at several projects and has supply agreements with a number of mines and traders, such as trading house Glencore and Australian miners Sally Malay Mining Ltd. and Fox Resources Ltd. .
WMC Resources Ltd. , a takeover target of BHP Billiton and Xstrata Plc. , holds a contract to supply 120,000 tonnes of nickel-in-matte, an intermediate product, to Jinchuan between 2005 and 2010.
The official added Jinchuan and its 10 percent shareholder, China's largest steel firm, Baosteel , were in talks to invest in the Nonoc nickel refinery in the Philippines.
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