South Korea to boost aluminum, copper reserves

SEOUL (Reuters) - South Korea, Asia's third-largest base metal buyer, plans to boost its strategic aluminum and copper reserves by 46 percent and 23 percent respectively this year, in anticipation of higher prices and demand when the economy recovers.

But it plans to reduce zinc and nickel purchases by around 30 percent because of ample inventory, the head of state-run Public Procurement Service (PPS) said at the Reuters Global Mining and Steel Summit in Seoul.

"This year offers the best opportunity to achieve value for money in stockpiling. We plan to actively purchase in the first half as metal prices are likely to gradually recover later this year," Kwon Tae-kyun, administrator of the agency, told Reuters.

"The plan will allow us to boost our strategic reserves sharply even with reduced spending and prepare for increased demand in 2010 when the economy is expected to recover."

After hitting record highs early last year, fueled by China's strong demand, most metals have lost more than half their value, with copper prices down around 60 percent, as a deepening global economic slowdown reduced commodities demand.

Kwon also said the agency plans to lend state warehouses to large firms for free or at cheap rates to increase base metal reserves in Asia's fourth-largest economy, which relies 97 percent on imports of raw materials to power its export-driven economy.

(Reporting by Miyoung Kim; Editing by Ben Tan)