UPDATE 1-Jiangxi Copper hopes Afghan, Peru mines to start in 2014-2016
HONG KONG, March 28
HONG KONG, March 28 (Reuters) - Jiangxi Copper Co Ltd , China's top copper producer, said on Wednesday its copper mining projects in Peru and Afghanistan would be delayed over political and legal issues, but it hoped to start production between 2014 and 2016.
The two projects had earlier been expected to start production between 2014 and 2015. Jiangxi Copper owns 25 percent of the Aynak project, with 75 percent owned by Metallurgical Corp of China. The firm owns 40 percent of the Peru project, with 60 percent owned by China Minmetals Non-Ferrous Metals.
"Due to various politics and legal issues, the progress of the two projects is different from what we had expected," Chairman Li Yihuang told a news conference in Hong Kong.
Progress at Afghanistan's Aynak project has slowed after Buddhist remains were uncovered at the mine southwest of Kabul in 2010.
Li said the company hoped a relocation plan would be finalized in the first half of this year but could not give a timeframe for completion.
He said the copper mine project in Northern Peru was undergoing an environmental assessment, with construction to start after the local government approved the assessment.
Li's comments came after the copper producer reported an increase of a third in its 2011 net profit.
But Li said this year's copper prices may not be as good as in 2011 and Jiangxi Copper expects domestic prices to average 57,000 yuan ($9,000) a tonne in 2012. Spot copper traded at 59,550 yuan in the domestic market on Wednesday.
Despite delays on overseas mining projects, Jiangxi Copper plans to lift production to 1.09 million tonnes of refined copper cathode this year, an increase of 16 percent from 940,000 tonnes last year, which itself saw a rise of 4.4 percent from 2010.
The firm's mines in China will produce 210,000 tonnes of copper contained in concentrates this year, up 4 percent from 202,000 tonnes last year.
Financial controller Gan Chengjiu said Jiangxi Copper planned to raise imports of raw material concentrate 13 percent to 1.02 million tonnes of copper concentrates this year, from about 900,000 tonnes last year. About 70 percent of the imports would be under term contracts and the rest would be bought in the international spot market.
The spot purchases will be determined on spot treatment and refining charges (TC/RC), which are paid by overseas sellers to Jiangxi Copper to convert concentrate imports into refined metal and deducted from concentrate sale prices based on London Metal Exchange copper prices.
This week, spot standard-grade concentrate was sold to China at TC/RCs of $53 a tonne and 5.3 cents a pound, respectively, compared to TC/RCs of $60-$63.5 and 6-6.35 cents for shipments in 2012, two smelter sources said. Offers from international trading houses were at around $40 and 4 cents.
LEAD, ZINC, RARE EARTHS
Chairman Li said Jiangxi Copper planned to expand into other areas in order to keep growth, but gave no details.
But the parent of Jiangxi Copper had no plan to inject its lead, zinc and rare earths assets into the listed company, said Li, who is also chairman of the parent.
The parent operates one 100,000-tonne-a-year lead smelter and one 100,000-tonne-a-year zinc smelter in the southeastern province of Jiangxi. Li said the parent was preparing to kick off massive mining of rare earths. ($1=6.3072 yuan) (Reporting by Polly Yam; Editing by Clarence Fernandez)