Private equity Klesch looks to buy copper and zinc assets

By Humeyra Pamuk

LONDON (Reuters) - London-based private equity firm Klesch said on Wednesday that it is looking to buy copper and zinc assets in the next twelve months, betting on strong metals demand from emerging countries which will keep the prices high.

Klesch has an aluminium smelter, bought from Alcan last May, with a capacity of around 290,000 tonnes. It also announced last week that it is in talks to buy two aluminium smelters from Europe's second biggest steelmaker Corus.

"You're going to look for announcements from us over the next 12 months in copper and zinc and other base metals," Chairman Gary Klesch told Reuters in a telephone interview on Wednesday.

"We're actively looking to add to the portfolio," Klesch said, but declined to provide a figure for how much investment is planned.

Klesch said physical assets in commodities rather than financial assets were much more attractive. "If you have a low cost operating base and the commodity goes up you get an exponential increase as opposed to an arithmetical one."

He said the company was looking at both downstream and upstream operations and was considering to acquire existing operations rather than greenfield projects.

The privately owned company has already invested in an $8 billion (4.3 billion pounds) greenfield project in Libya, to build a 300,000 barrels per day oil refinery and a 725,000 tonne per year aluminium smelter -- due to be completed by 2011.

"We love the fundamentals of aluminium over the next 5-10 years," Klesch said, adding they still believed in the commodities super cycle -- a long-term price rally -- which came into question recently as worries about global growth prompted a commodity sell-off.