MELBOURNE (Reuters) - MMG Ltd, the international mining unit of state-owned China Minmetals Corp, has become China’s preferred developer of overseas projects and is looking at acquisitions beyond its core strengths of copper and zinc, MMG’s chief executive said.
As well as actively looking for copper and zinc projects to develop, “We continue to assess other commodities,” Jerry Jiao told reporters at a Melbourne Mining Club lunch. Jiao said that could include other materials needed for electric vehicles.
China’s government is supporting moves overseas by state-owned industries with a keen focus on commodities in which China is short, said the CEO of MMG, headquartered in Melbourne.
“Minmetals has been selected as a pilot program for SOE (state-owned enterprise) reform – the only one in the metals sector,” he said. “This has now positioned MMG as a preferred vehicle for foreign direct investment into international resource investment in ‘China-short’ commodities.”
Jiao said it is becoming more difficult to make acquisitions, as his firm is chasing the same copper assets that other miners, now cash-rich after fixing their balance sheets, want to snare.
“The competition is getting more severe. It’s just not easy to do what we planned,” he told reporters after speaking at the event in Melbourne.
As a result, MMG may look more towards partnering other companies on the assets it wants to acquire, rather than going for acquisitions paid fully in cash, he said.
Beijing is trying to streamline and modernize its bloated and debt-ridden state-owned sector and create conglomerates capable of competing globally. It has ordered all state-run enterprises to modernize their ownership structures and introduce private capital as part of a far-reaching reform program for its debt-ravaged state sector.
Minmetals’ selection for the trial was partly due to MMG’s successful development of the Las Bambas copper mine in Peru and its zinc mine, Dugald River, in northern Australia, Jiao said, a “demonstration that China can deliver and operate world scale international mining projects – and deliver value.”
MMG expects to produce 65,000-72,000 tonnes of zinc and 560,000-615,000 tonnes of copper this year, it said in August. It will release its third-quarter production report on Oct. 18.
The company posted a half-year profit of $17.8 million in August.
Reporting by Melanie Burton and Sonali Paul in MELBOURNE. Additional reporting by David Stanway in SHANGHAI; Editing by Neil Fullick and Kenneth Maxwell